JPMorgan cuts Adidas stock price target to EUR236 from EUR250, maintains Overweight rating

JPMorgan has lowered its price target on Adidas AG to EUR236.00 from EUR250.00 while maintaining an Overweight rating, citing the necessity for new earnings growth drivers beyond its successful Terrace collection. Despite a 30% year-to-date decline in shares, the firm views the current valuation as attractive, expecting EBIT margin expansion in FY25/26 driven by disciplined product management, cost control, and moderating external headwinds. JPMorgan has placed Adidas on Positive Catalyst Watch ahead of its Q3 2025 results, anticipating a potential re-rating, while the company affirmed its full-year guidance for high-single-digit revenue growth and 6.5-7% margins, with Q2 results due July 30.

Analysis

Despite lowering its price target on Adidas AG (ADDYY) to EUR236.00 from EUR250.00, JPMorgan maintains an Overweight rating, signaling underlying confidence. The adjustment reflects concerns over the company's need to identify a new earnings growth driver as momentum from its successful Terrace collection (Samba, Gazelle) is expected to mature. However, the bank anticipates future EBIT margin expansion in FY25 and FY26, supported by disciplined product management, cost controls, and moderating external headwinds, including a potential tailwind from foreign exchange rates. With the stock down 30% year-to-date and trading near its 52-week low, JPMorgan views the risk/reward profile as attractive, suggesting market expectations have been sufficiently reset. This view is reinforced by JPMorgan placing Adidas on a 'Positive Catalyst Watch' ahead of its Q3 2025 results, anticipating a re-rating. In the nearer term, the company's upcoming Q2 results on July 30 will be a key data point, especially as the firm has maintained its full-year guidance for high-single-digit revenue growth and a margin between 6.5% and 7%. Bernstein's more bullish stance, with a reiterated Outperform rating and a EUR300 price target, provides further positive sentiment.

Key Decisions for Investors

• Given the 30% year-to-date share price decline and analyst views of 'reset' expectations, the current valuation presents a potentially attractive entry point for investors confident in management's ability to drive margin expansion.
• Investors should closely monitor the upcoming July 30 earnings release for confirmation that the company is on track to meet its full-year guidance for high-single-digit revenue growth and a 6.5-7% margin.
• Pay close attention to management commentary regarding the innovation pipeline and strategy for growth beyond the Terrace collection, as this is the central long-term risk and a prerequisite for achieving the margin expansion forecasted for FY25 and FY26.