Adidas Stock Outlook

Adidas (ETR:ADSGN) (OTC:ADDYY) stock may be poised for near-term outperformance, according to analysts from Baird. Despite a “neutral” rating, analysts are optimistic about several upcoming catalysts that could drive growth towards the end of the year.

Positive Catalysts

Baird points to:
– Solid brand momentum
– Strong performance in key regions
– Potential upward earnings revisions for 2025

Terrace Footwear Segment Strength: The terrace footwear line and distribution expansion are identified as underappreciated sources of growth, especially in China.

Upcoming Events: An upcoming sell-side focused call and potential pre-release of earnings in October could further boost market confidence.

Earnings Projections

• Expected Q3 Earnings: Analysts project a strong third quarter with:
  • Earnings per share (EPS) raised to €2
  • Revenue growth of 16% year-over-year (excluding Yeezy)
  • Operating profit predicted at €520 million (7.9% margin)

Search Trends: Strong interest in classic models such as Samba, Gazelle, and Spezial remains.

Market Performance

Adidas has shown gains in recent quarters with strong sales in Europe and a projected 5% growth in North America. Sales in China rose by 9% last quarter.

Long-Term Outlook

Despite the positive short-term projections, analysts caution regarding longer-term prospects amid Nike’s expected resurgence and upcoming challenges in Adidas’s product pipeline. The brand needs to foster confidence in scaling retro styles and product innovation.

Under CEO Bjørn Gulden, the “Earn the Game” strategy focuses on profitability and EBIT margin expansion, aiming for a double-digit margin by 2026. Adidas’s position as a global company enables it to capitalize on athletic trends.

Valuation Update

Baird raised Adidas’s price target to €260 from €255, valuing at a 25X P/E ratio based on an €11.40 earnings estimate for 2026. While competitors like Nike and Lululemon may present better near-term valuations, the execution of Adidas’s turnaround could lead it to strong near-term performance.

Shares of Adidas rose 1.6% on Friday.