Adidas is the second largest sportswear giant in the world, behind Nike. She designs and manufactures shoes, clothing and accessories for a wide variety of activities.
Its products, which are manufactured under brands such as Adidas, Reebok and TaylorMade, are widely used in sports such as football, running and basketball, as well as in casual wear in general.
According to Statista, Nike generated worldwide revenue of $ 37.4 billion (£ 27.7 billion) in 2020, while Adidas made $ 24.3.
Adidas Stock Analysis: Technical View
Adidas AG stock is listed on the Deutsche Börse stock exchange in Frankfurt, Germany. It is part of the DAX 40 index, which is made up of the largest German companies.
As the chart below shows, Adidas stock is down in 2021, with a loss of 9.15% year-to-date. This is significantly lower than the 11.24% return this year for the benchmark Adidas DAX 40, suggesting that the company is underperforming the overall market.
The stock hit a record high of € 336.25 on August 4, just before the company announced its latest earnings report. Since then, Adidas has struggled to recover from the peak, with price action falling and wiping out 19% of the stock’s value between August and October.
Adidas stock market news: latest results and outlook
In early August, Adidas reported that currency neutral sales rose 55% in the second quarter of 2021, as revenues in EMEA and North America nearly doubled. The press release also revealed that operating margin improved to 10.7%, while net income from continuing operations stood at 387 million euros.
Kasper Rørsted, CEO, said it was a “very successful quarter” driven by brand strength and better than expected demand for its products.
Still, the stock price reacted negatively to the report, falling 6% on the day of the announcement as production concerns outweighed the rebound in sales.
Adidas said it continues to be affected by lockdowns related to Covid-19, industry-wide supply chain challenges and the geopolitical situation. However, the sportswear giant has further upped its revenue and profit outlook for 2021.
“The company now expects currency neutral sales to increase at a rate of up to 20% year-over-year in 2021, thanks to strong double-digit improvements in all markets,” said he declared.
“This new outlook reflects sales growth of up to 7% in the second half of the year compared to 2020 levels.”
This growth is expected to be fueled by “a range of innovative product launches” including the reintroduction of NMD, one of the company’s most successful franchises in recent history. Short for nomad, NMD is a range of innovative sneakers first launched in 2015.
Adidas highlighted the string of major sporting events slated for the remainder of 2021. These included the start of the club football season in Europe and the start of the NFL season in the United States.
The company stressed that these major events – along with local activities across the globe – will provide “ideal platforms for telling brand and product stories” in front of global and local audiences.
Adidas grants sale of Reebok
In August 2021, Adidas also announced that it had agreed to sell Reebok to Authentic Brands Group (ABG) for € 2.1 billion (£ 1.8 billion). The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2022.
Kasper Rørsted said Reebok is a valuable part of Adidas and the company is grateful for the contributions of the brand and the team behind it.
“With this change in ownership, we believe the Reebok brand will be well positioned for long term success,” he said.
Jamie Salter, founder, president and CEO of ABG, said it was “an honor to be entrusted” with the responsibility of continuing the legacy of Reebok.
“This is an important milestone for ABG, and we are committed to upholding the integrity, innovation and values of Reebok, including its presence in bricks and mortar,” added Salter.
Adidas stock price predictions
According to the algorithm-based forecasting service Wallet Investor, the one-year forecast for Adidas is € 302.76, which is a potential increase of 11% from the current price of € 272.70.
Over five years until 2026, the site suggests that the stock could have reached € 422.32. This would represent a 55% increase over the current share price.
MarketBeat data shows the stock’s consensus rating is “hold”, based on the opinion of 17 analysts. Of those, 10 currently classify it as a ‘hold’, six suggesting it is a ‘buy’ and one as a ‘sell’.
This is an improvement over a year ago, when 19 analyst opinions resulted in eight saying it was a ‘buy’, six classifying it as a ‘hold’ and five thinking the action was a “sale”.
The current 12-month average price target for the company is € 322.65, which suggests 18% upside potential over the current share price of € 272.70. The highest is € 375 per share, while the lowest is € 255 per share.
Note that analysts are wrong in their predictions. It is essential that you do your own research to form an opinion on a company’s performance and the likelihood of achieving goals if you decide to invest in Adidas. Remember that markets are volatile and past performance of the stock is no guarantee of future gains.
What Are Adidas Analysts Saying?
Danni Hewson, financial analyst at AJ Bell, told Capital.com that rival Nike has always been the Achilles heel of the German company.
“Adidas has had a pretty great year by anyone’s standards, until you compare it to Nike,” she said. “He just can’t compete in the numbers game. “
While acknowledging that the growth reported by Adidas in its last quarterly update was good, she noted that Nike’s was better.
“He was more able to capitalize on the demand for casual wardrobes for work from home and the post-Covid health boost,” she said.
However, Hewson believes Adidas retains many “staunch supporters” and suggested the sale of Reebok would give investors something to look forward to in the New Year. In addition, the Adidas share price could whet investor appetites.
“When you compare Adidas to both Nike and Puma, the former has seen relatively small gains over the past 18 months, which might suggest that there is more leeway if the upcoming winter swings can. be brought under control, ”she said.
In a note, JP Morgan analyst Grace Smalley said Adidas has top market share in Europe and Russia, as well as second in the United States and China.
“Adidas is experiencing very strong and renewed brand momentum in all regions, with Greater China being a very profitable region and North America the key question mark in the mid-term margin story that has led to the sharp revaluation of stocks over the past few years, ”Smalley wrote.
The analyst is currently “neutral” on the title. “While the recent normalization of revenue growth should be well accepted and understood by now, we believe that Adidas will once again have to show a re-acceleration of its momentum before proceeding with a further reassessment,” he said. she adds.
Meanwhile, CaixaBank / BPI pointed out that Nike has significantly reduced its full-year sales forecast due to the lengthening of the supply chain distribution.
“This should have a negative read-across for Adidas,” he said in a report. “This supply constraint is mainly due to the difficult situation of Covid-19 in Asia, more precisely in Vietnam which has forced suppliers to remain closed for an extended period.”
The bank pointed out that the sporting goods industry has “relevant sourcing exposure” in Vietnam.
“In the case of Adidas, this represents 43% of footwear volumes, 19% in the case of apparel products (28% in total),” he said. “Overall, this drop in Nike’s forecast could also prompt Adidas to downgrade its targets for 2021.”
Adidas company history
The history of the company dates back to a small town in Bavaria, Germany, in 1924. It was the home of Adi Dassler, who established a small shoe factory with the aim of providing athletes with the best possible equipment. . His brother Rudolf got involved in the business before he left to found rival Puma, which is another well-known brand today.
Adidas, which has been synonymous with displaying three stripes as a logo, has had its products worn by a series of sports heroes. For example, in the late 1960s German footballer Franz Beckenbauer was pictured wearing an Adidas tracksuit and sneakers.
Adi Dassler died in September 1978, shortly before he was 78. Adi’s wife, Käthe, with the support of her son Horst, took over. The company continued to consolidate its reputation as a leader in what has become a growing sports and leisurewear industry over the following decades.
Edited by Jekaterina Drozdovica
The current 12-month average price target for the company is € 322.65. The highest is € 375 per share, while the lowest is € 255 per share.
The company has reported increased sales as the world reopens after Covid-19 lockdowns. He also announced that he was selling Reebok.
Data from MarketBeat suggests that analysts’ current 12-month average price target for the stock is € 322.65, suggesting 18% upside potential from the current stock price of 272. € 70. The highest is € 375 per share, while the lowest is € 255 per share.
Note that analysts are wrong in their predictions. It is essential that you do your own research to form an opinion on how well a business is performing and how likely it is to achieve goals. Remember that markets are volatile and past performance of the stock is no guarantee of future gains.
Read more: Nike earnings forecast push down Adidas, Puma and JD Sports
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