Raymond James made Nike its "top pick" in the consumer sector due to its recent initiatives to sell directly to consumers on social media and e-commerce platforms.
The firm initiated coverage on the sportswear company's shares with an outperform rating.
"The growing influence of millennials is radically transforming the sporting goods industry," analyst Cedric Lecasble wrote in a note to clients Thursday. "Nike's approach to social media and e-commerce has radically evolved for the better recently, in our view … Leading brands' online growth will outpace retailers' as they develop customization capabilities (Nike and Adidas lead the game) and improve their collaboration with Amazon."
Nike reported fourth-quarter earnings and sales above Wall Street's expectations last week. The company confirmed a new pilot deal with Amazon on its earnings call, where it will sell a limited product assortment on the internet giant's e-commerce website. The firm also said it will start selling its product directly to consumers on Instagram, which is owned by Facebook.
Lecasble started his Nike price target at $71, representing 23 percent upside from Wednesday's close.
The analyst cited how Nike "has by far the largest number of followers" on Instagram versus its competitors. He added the firm's social media interactions with customers are more than four times higher than Adidas.
Lecasble also noted how Nike has more than 90 percent market share of the basketball shoes market. Nearly 75 percent of NBA players are sponsored by the company, according to the analyst.
"As far as athletes' endorsements are concerned, we believe Nike is still at a competitive advantage versus its main rivals. Strong inflation in athlete/team endorsements has given a clear advantage to the player with the deepest pockets," he wrote.
Nike shares are up 13 percent this year through Wednesday versus the S&P 500's 8.7 percent return.
— CNBC's Michael Bloom contributed to this story.