On Wednesday, investment firm Baird adjusted its stock price target on Adidas AG (ETR:ADSGN) (ADS:GR) (OTC: ADDYY), increasing it to €240 from the prior target of €225. The firm has chosen to keep a Neutral stance on the stock.
Baird's decision comes after Adidas (OTC:ADDYY)' first-quarter update, which aligned with positive preliminary signals. The company's growth is expected to gain traction in the second quarter and the second half of the year, bolstered by a series of favorable factors. These include increased excitement around the brand and products, better inventory and order situations, and a strong lineup of sports events.
The firm also noted that with several of Adidas' footwear lines gaining popularity, the company's gross margin has surpassed 50%, and operating expenses are being leveraged modestly. These factors contribute to the growing likelihood that Adidas will achieve an EBIT margin of over 10% by the forecasted 2026.
Despite the optimistic outlook on Adidas' financial health and brand strength, Baird remains cautious due to the uncertain economic environment. The firm suggests that a price closer to €200 per share would present a more attractive entry point for investors. Still, they acknowledge that such an opportunity may not arise if Adidas continues to maintain its current momentum.
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