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On Tuesday, Berenberg initiated coverage on Adidas AG (ETR:ADSGN) (ADS:GR) (OTC: ADDYY), a $40.9 billion market cap company and prominent player in the Textiles, Apparel & Luxury Goods industry, with a Hold rating and set a price target of €230.00. According to InvestingPro data, the company maintains a Fair financial health rating with strong cash flow metrics. The firm’s analyst highlighted the strength of Adidas (OTC:ADDYY)’s diverse product line and current brand momentum as key factors in the company’s resilience in the face of changing fashion trends. The analyst emphasized the importance of backing companies with strong brand momentum, which Adidas currently enjoys.
The analyst pointed out that Adidas’s comprehensive product portfolio offers a buffer against shifting consumer preferences, which is a crucial advantage in the fashion-driven sports apparel industry. This strategy appears to be working, as evidenced by the company’s solid 50.8% gross profit margin and 10.5% revenue growth in the last twelve months. The brand momentum, according to the analyst, is a significant asset for Adidas, as it is a determining factor for success in the sector.
Despite these positive elements, the analyst expressed caution regarding Adidas’s medium-term financial targets, which have been described as overly ambitious. This concern is compounded by what the analyst terms "irrational and erratic US trade policy," which could potentially impact Adidas’s performance.
The valuation of Adidas stock was also a subject of scrutiny, with the analyst noting that it fully discounts EBIT margins at the high end of Adidas’s historical 30-year range. This suggests that the market may have already accounted for the company’s potential earnings growth, leaving little room for upside in the stock price.
The Hold rating indicates that Berenberg does not currently see significant potential for Adidas stock to outperform the market, given the balanced view of the company’s strengths and the challenges it faces. The price target of €230.00 serves as an indicator of where the firm believes the stock will trade in the near term, based on their analysis.
In other recent news, Adidas AG has been the subject of several analyst reports, highlighting both positive and cautious outlooks. HSBC upgraded Adidas’s stock rating from Hold to Buy, though it lowered the price target to €240.00 from €260.00, citing the company’s potential for market share gains amid challenging economic conditions. RBC Capital Markets also identified Adidas as an attractive Outperform idea, noting strong brand momentum and visibility in its wholesale order book. Meanwhile, Bernstein maintained an Outperform rating with a price target of €300.00, emphasizing robust demand and a promising product pipeline, particularly in the U.S. market.
TD Cowen retained a Hold rating with a €262.00 target, acknowledging Adidas’s strong start to fiscal year 2025 and its ability to exceed conservative growth forecasts. Deutsche Bank (ETR:DBKGn), while maintaining a Buy rating, adjusted its price target to €280.00 from €300.00, recognizing Adidas’s operational efficiency and strong earnings momentum. The analysts at Deutsche Bank expect Adidas to lead in sales and EPS growth into 2025, despite revising the 2025 EBIT forecast downward by 9%. Investors are closely watching Adidas’s strategic moves and its ability to navigate the current economic landscape while maintaining growth.
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