On Wednesday, Telsey Advisory Group adjusted its price target on Adidas AG (ETR:ADSGN) (ADS:GR) (OTC: ADDYY) shares, increasing it to €225 from the previous €205, while keeping a Market Perform rating on the stock. The revision comes after Adidas (OTC:ADDYY) reported a strong first quarter in 2024, which indicated a significant improvement in the company's performance.
The firm noted that Adidas demonstrated a recovery with increased brand popularity and more efficient inventory management. This has enabled the company to minimize discounting in the market.
Analysts are anticipating further details during the earnings call, which will cover regional sales trends, factors contributing to the sales increase, any changes in the order book since the previous call in March, the updated gross margin forecast, and new product developments.
Telsey's analysis suggests that Adidas is on track to reach an operating margin in the mid-single-digit (MSD) range for the year 2024. This progress aligns with Adidas's goal of achieving an operating margin of around 10% by 2026.
The firm's revised 12-month price target is based on a price-to-earnings (P/E) ratio of approximately 22 times its updated 2026 earnings per share (EPS) estimate of €10.15, an increase from the former estimate of €9.20.
The report acknowledges the potential for Adidas's turnaround but also suggests that the current share price may already reflect much of the company's anticipated improvements.
InvestingPro Insights
Adidas AG's recent performance has caught the attention of analysts and investors alike. With Telsey Advisory Group adjusting its price target, it's worth noting some key metrics and insights from InvestingPro that could lend further context to the company's financial landscape. Adidas's market capitalization stands at a robust $41.62 billion, reflecting its significant presence in the industry. Despite facing a challenging period, with a negative revenue growth of -4.82% over the last twelve months as of Q1 2023, the company's gross profit margin remains strong at 47.52%. This indicates that Adidas has been effective in maintaining profitability on its products despite revenue fluctuations.
InvestingPro Tips highlight that Adidas is expected to see net income growth this year and that four analysts have revised their earnings estimates upwards for the upcoming period, signaling confidence in the company's potential. Additionally, with a notable three-month price return of 23.28%, the company has demonstrated strong recent performance in the stock market. Investors and potential shareholders can find more detailed analysis and additional tips on InvestingPro, with a total of 11 tips available for Adidas. For those interested in diving deeper, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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