ADS: Brand Strength Will Support Premium Margins Despite Intensifying Competitive Pressures

The analyst price target for adidas has been modestly reduced to EUR 222 from EUR 229 as analysts temper their fair value and margin assumptions, despite recent supportive coverage including new Outperform and Overweight ratings.

Analyst Commentary

Bullish analysts point to a supportive fundamental backdrop for adidas, with recent coverage highlighting confidence in the company’s ability to sustain profitable growth despite a more competitive landscape in sportswear and footwear.

At the same time, the modest trimming of the consensus price target underscores a more measured stance on execution risk and margin durability, particularly as adidas navigates product cycles and regional demand normalization.

Bullish Takeaways

• New Outperform coverage with a EUR 210 price target reinforces the view that adidas remains undervalued relative to its long term growth potential, even after the recent share price recovery.
• The higher EUR 238 price target from JPMorgan, paired with an Overweight rating, signals confidence in adidas delivering above consensus earnings through a mix of pricing, product innovation, and cost discipline.
• Bullish analysts see continued brand strength and global distribution scale as key drivers supporting a premium valuation multiple versus smaller athletic peers.
• Supportive research flow, including multiple positive initiations and target upgrades, is viewed as a potential catalyst for further re rating as execution milestones are met.

Bearish Takeaways

• The small reduction in the overall analyst price target suggests growing caution around margin upside, with some assuming more conservative gross margin and operating leverage trajectories.
• Competitive pressures in key categories, particularly running and team sports, are seen as a constraint on pricing power and share gains, limiting the scope for significant valuation expansion.
• Bearish analysts highlight execution risk around product diversification and regional mix, warning that missteps could delay the path to higher, more sustainable returns.
• References to adidas as a strong incumbent in other companies’ research underscore that while the brand is well positioned, it is also exposed to any slowdown in broader athletic demand cycles.

What's in the News

• Adidas raised its 2025 guidance, now expecting around 9% currency neutral revenue growth for the adidas brand and operating profit of about €2.0 billion, up from a prior €1.7 billion to €1.8 billion range (company guidance).
• The company is moving ahead with a €499.61 million fixed income offering, adding J.P. Morgan SE, Banco Bilbao Vizcaya Argentaria, BNP Paribas, Deutsche Bank, UniCredit Bank, and DZ BANK as co lead underwriters, broadening its banking syndicate (offering documentation).
• Adidas launched PG x Adidas Adizero Impact Shades Cleats in partnership with Perfect Game, a limited edition baseball cleat collection that sold out on site at its debut tournament and will anchor future collaborative product activations (product announcement).
• Adidas and GLO, a Bunzl plc business unit, announced adidas pro work, a new high performance safety footwear line targeting construction, maintenance, and logistics workers, with first models slated for launch in the second quarter of 2026 (client announcement).

Valuation Changes

• Consensus Analyst Price Target: fair value estimate reduced modestly to approximately €222.3 from €229.5, reflecting a slightly more cautious outlook.
• Discount Rate: nudged down marginally to about 6.83% from 6.84%, implying a nearly unchanged perceived risk profile.
• Revenue Growth: long term growth assumption edged lower to roughly 7.93% from 7.99%, indicating a small tempering of top line expectations.
• Net Profit Margin: projected profitability trimmed to around 8.13% from 8.34%, signaling slightly lower margin durability assumptions.
• Future P/E: forward valuation multiple eased fractionally to about 19.23x from 19.31x, pointing to a minimally lower premium embedded in the model.