Investing.com — Bernstein upgraded Adidas (OTC:) to an Outperform in a note on Monday and set a new price target of €300 per share, up from €212.
The company pointed to the sportswear giant’s strong growth trajectory and improving market position.
After years of declining market share, Adidas is now on a path to recovery and sustained growth, according to new analysis from Bernstein.
“Adidas is poised for a multi-year winning streak,” Bernstein analysts declared, emphasizing that the company’s EPS compound annual growth rate (CAGR) is expected to be 70% over the next two years.
This growth is said to be supported by positive data from channel checks, consumer research and real-time pricing data, all of which are expected to deliver consistent growth rates of up to 10% through 2026. Suggests.
Lifestyle footwear and apparel is expected to be the main growth driver, led by products such as Samba and Gazelle.
“Terrace (i.e. samba, gazelle) is a 2024 success story and continues to have strong momentum into 2025,” Bernstein said.
The company said management is also launching new franchise businesses in both categories, which are expected to contribute significantly to incremental growth of approximately €5 billion from 2024 to 2026.
Bernstein forecasts that this growth will lead to a significant increase in profit margins, with an estimated EPS of 11.82 euros by 2026 and a CAGR of 70% from 2024 to 2026, outpacing other sportswear brands. It shows that.
Despite the positive metrics, Bernstein believes the market is undervaluing Adidas, with the company’s stock trading at less than 20x FY2026 EPS, compared to the pre-pandemic average of 25x. are.
Bernstein concluded that “matching stock prices to pre-COVID valuations would give us 29% upside,” and a strong product cycle could deliver an additional 20 points of upside. he added.
