On Wednesday, Adidas AG (ETR:ADSGN) (XETRA:ADS) (OTC:ADDYY) stock received an upgrade from Telsey Advisory Group, moving from a Market Perform to an Outperform rating, with a revised price target raised to EUR 285.00 from the previous EUR 245.00. The upgrade was prompted by the company's robust second-quarter performance, which surpassed expectations.
Adidas (OTC:ADDYY) reported a significant 11% growth in constant currency revenue for the second quarter of 2024, with an even more impressive 16% growth after excluding its Yeezy brand sales. This performance indicated a notable acceleration from the 5% growth observed in the first quarter of 2024, demonstrating strong consumer demand for Adidas footwear through direct-to-consumer channels and wholesale.
The strength in the second quarter was largely attributed to the success of Adidas Originals franchises, particularly the Samba and Gazelle models. These products have gained increasing visibility in the United States and have sold out in various spring and summer colorways.
The positive outlook is further bolstered by the brand's efforts to capitalize on the terrace trend, with other lifestyle franchises like SL72 and Superstar beginning to gain traction. These models are currently available in Adidas stores and select retailers, including Foot Locker (NYSE:FL), suggesting potential for continued growth in the lifestyle segment.
The performance of Adidas in the second quarter of 2024 reflects the company's underlying brand strength and its ability to connect with consumers through popular product lines. With the upgraded rating and higher price target, the market's confidence in Adidas' strategic direction and product offerings appears to be strengthening.
In other recent news, Adidas AG reported a significant acceleration in sales growth and raised its full-year 2024 EBIT (earnings before interest and taxes) guidance to approximately €1 billion. Morgan Stanley reaffirmed its Overweight rating on Adidas, maintaining a price target of €258.00.
The firm's analysis suggests an upward revision of both revenue and profit forecasts for the company's second quarter results. This positive outlook is shared by RBC Capital, which highlighted Adidas' positive earnings revisions and strong brand momentum within the sporting goods sector.
Deutsche Bank adjusted its price target on shares of Adidas, raising it to €255.00 from the previous target of €250.00, and reiterated its Buy rating on the stock. For the second quarter, Deutsche Bank forecasts an underlying sales growth of approximately 9.5% for the Adidas brand and estimates a second-quarter EBIT of €258 million, marking a 47% year-over-year increase.
Adidas is strategically focusing on its Samba and Gazelle sneakers, which have seen a dramatic increase in sales. Bernstein analyst Aneesha Sherman estimates that these shoes will generate approximately €1.5 billion in sales this year, accounting for around 7% of Adidas's overall revenue.
In addition to these popular models, Adidas is promoting its Campus shoes and preparing to market its Superstar shoe more aggressively next year. These are some of the recent developments in Adidas's business strategy and market positioning.
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