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On Thursday, BofA Securities analyst Thierry Cota revised the firm’s stance on Adidas AG (ETR:ADSGN) (ADS:GR) (OTC: ADDYY), upgrading the stock from Neutral to Buy. The new price target is set at EUR260, reduced from the previous EUR274. The $42.6 billion sportswear giant, which according to InvestingPro data trades at a P/E ratio of 50x, received the upgrade based on four primary reasons: continued superior sales growth, operational efficiencies relating to operating expense leverage, reduced tariff risks due to geographical advantages, and an attractive valuation compared to peers.
Adidas (OTC:ADDYY) has been experiencing strong brand traction, with InvestingPro data showing impressive revenue growth of 10.53% and a robust gross margin of 50.77%. The company’s focus has shifted towards leveraging operating expenses after witnessing a rise in gross margin last year. Cota pointed out that Adidas is close to achieving its FY26 EBIT margin target of around 10%, having nearly reached this goal in the first quarter.
The analyst also highlighted Adidas’s lower risk from tariffs, with 20% of sales in the United States and 27% of sourcing from Vietnam, positioning it favorably against competitors. The current weakness of the dollar, if it persists, could negate any negative impact of tariffs on earnings.
Despite the reduction in the price target, which reflects a lower multiple in peer valuation, Cota believes that the potential upside for Adidas stock is significant, with a 24% material potential. The slight 10% premium in Adidas’s price-to-earnings ratio compared to its peers is now seen as attractive, given the company’s operational outperformance and low earnings per share risk in a challenging economic environment. According to InvestingPro analysis, Adidas is currently trading above its Fair Value, with additional insights available in the comprehensive Pro Research Report, which offers deep-dive analysis of 1,400+ top stocks.
In other recent news, Adidas AG has experienced a series of developments that are capturing investor attention. Baird analysts have upgraded Adidas to an Outperform rating, setting a new price target of EUR240.00, citing the company’s global brand momentum and a promising product pipeline. Despite trimming earnings per share estimates, Baird maintains a positive long-term outlook, suggesting potential growth for the sportswear giant. Berenberg, on the other hand, initiated coverage with a Hold rating and a price target of €230.00, acknowledging Adidas’s strong brand but expressing caution over its medium-term financial targets. HSBC also upgraded Adidas to Buy, though it reduced the price target to €240.00, highlighting expectations of market share gains amid challenging economic conditions. RBC Capital Markets identified Adidas as an attractive Outperform idea, emphasizing its strong brand momentum and wholesale order book visibility. Meanwhile, Bernstein maintained an Outperform rating with a price target of EUR300.00, pointing to robust consumer demand and promising product developments that could drive further growth. These recent developments reflect a mixed but generally optimistic outlook from analysts regarding Adidas’s potential in the coming years.
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