Shares of German athletic apparel and footwear maker, Adidas (ADDYY) gained in morning trading at the time of publishing on Monday after Bernstein analyst Aneesha Sherman upgraded the stock to a Buy from a Hold and raised the price target to €190 from a prior €155. The analyst’s price target implies an upside potential of 19.7% at current levels.
Sherman is of the view that Adidas could benefit from soccer star Lionel Messi’s move to Major League Soccer (MLS) club Inter Miami FC and could shake off the lingering impact of the Yeezy brand inventory overhang.
The analyst pointed out Messi’s move could see sales rebound in the United States while economic recovery in China could be another positive factor. The retailer’s margins could expand following easing supply chain and inventory issues.
Sherman added that these factors could ease the new CEO, Bjørn Gulden’s woes, allowing him to pursue a successful turnaround of the company.
The analyst commented, “…last week’s Yeezy shoes launch sold out without backlash to the brand, and this week’s news of Messi (with Beckham) in Miami bodes well for US share gains. From our channel checks in US, Europe and China this week, retailers are still heavy on inventory but have under-ordered for H2 and expect to clear most stock by end of year, setting up 2024 well for growth.”
Analysts are sidelined about Adidas stock with a Hold consensus rating based on five Buys, eight Holds and four Sells.
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