On Wednesday, Adidas AG (ETR:ADSGN) (XETRA:ADS) (OTC:ADDYY) saw its price target increased to €255 from €240 by Baird, while the firm retained a Neutral stance on the stock. The revision follows Adidas (OTC:ADDYY)' pre-release of strong second-quarter results, which showed a significant uptick in revenue growth.
Adidas reported a 16% rise in revenue, excluding currency effects and sales from the Yeezy brand, after a modest 5% growth in the first quarter. This performance was driven by sustained brand strength, particularly in the terrace and Originals footwear categories.
The company also revised its 2024 earnings guidance upward, now anticipating high single-digit revenue growth, excluding currency effects, and an operating profit of €1.0 billion, an increase from the previously projected €700 million.
The updated 2024 earnings forecast suggests a cautious outlook for the second half of the year, despite recent momentum. Baird acknowledged the company's recent performance and potential for recovery over the coming years.
The firm's analysis reflects a balance between a positive view of Adidas' fundamentals and the current price-to-earnings (P/E) premium, which stands at 32 times the estimated earnings for 2025.
Adidas' pre-release of second-quarter results indicated a healthy acceleration in underlying growth, attributed to continued brand strength. The raised guidance for 2024 earnings is seen as a conservative estimate in light of the brand's recent momentum.
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