Adidas: share shows promising chart picture – analysts are positive about the business prospects

Adidas stock remains on the uptrend after being lured to investors by more positive analyst research in today's trading session. The analysis firm Jefferies issued a buy recommendation for the shares of the sporting goods manufacturer, and the Swiss bank UBS and Bryan Garnier reiterated their recommendations and also raised their price targets.

By the early afternoon, the Adidas paper had risen by 1.3 percent to 283.70 euros in the almost unchanged leading index Dax. The course is now also being driven by chart technology: After a weak phase in March, it has gradually gone up again. Halt gave support in the EUR 260 area, which was last tested in late January 2021. In early April, the stock hit the 200-day moving average from below and settled above it in the days after Easter. The price has gained nine percent since the March low.

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Knock-outs on Adidas stock

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The analysts from Jefferies, UBS and Bryan Garnier are now optimistic because of the recently presented new strategic plan and ahead of the upcoming quarterly figures.

According to Jefferies analyst James Grzinic, with a view to Adidas' 2025 strategy, the target margin of twelve to 14 percent in particular provides greater confidence. In addition, the move towards direct sales, the targeted expansion of the total market that can be reached and the strong growth in industry support his estimates of average annual growth rates in the high single-digit percentage range. Measured by the share price, Grzinic believes the yield potential of the Adidas share is attractive, which is why he has now upgraded it from "hold" to "buy". He raised the price target from 280 to 340 euros.

This is below the price target of EUR 361 that UBS analyst Zuzanna Pusz has now called up. Pusz had also increased its price target by 3 euros in view of the corporate strategy announced during the capital market day. The forthcoming quarterly report is the first since Adidas initiated the sale process for US subsidiary Reebok and then announced the new strategic plan in March, she wrote. According to the UBS expert, the figures should make it clear that the sporting goods manufacturer is on course for the upper end of its full-year targets, despite the continued skeptical attitude of many investors to the new corporate strategy.

Adidas is seen as a "show-me-story" in the industry, which is why many prefer to wait and see. "Adidas' shift in focus towards sales growth, however, should mark the end of underperforming the brand compared to its competitors in the current year," the UBS expert specified. In the first quarter, she expects a strong recovery in China, which, however, is likely to be eroded by weaker momentum in North America and the European economic area. Towards the end of the quarter, however, the first benefits of new product launches should have become noticeable.

Cédric Rossi from the investment bank Bryan Garnier also referred to the capital market day and the quarterly figures expected on May 7 for his price target increase from 325 to 330 euros. The analyst expects sales in the first quarter of 2021 to have exceeded those of the first quarter of 2019 on a currency-neutral basis. Including negative currency effects, they are likely to have at least "fully recovered to pre-corona levels," he wrote. These exchange rate effects are likely to create headwinds in the first half of the year and put pressure on margins. Nevertheless, despite the further lockdown risks in Europe, Rossi sees attractive entry opportunities for investors again.

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