Market confidence in Adidas [ETR:ADS] is rising, thanks to the success of the company’s Terrace product. However, industry experts believe this trend peaked between the second half of 2023 and the first half of 2024. They predict it will decline by 2026 as consumers move on, having already bought into the style and now looking for something new.
The big question is: what’s next for Adidas after the hype around its Samba and Gazelle terrace sneakers?
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While Adidas excels at capitalizing on established franchises, its track record for launching innovative new products isn’t as strong. Meanwhile, there’s a significant chance that Nike NYSE:NKE will introduce a new product in the next 18 months, potentially setting new trends and impacting Adidas sales once again.
In North America, sales are projected to remain flat or decline, despite recent uncertainties surrounding Nike, which continues to show strength and competitiveness. Moving forward, Adidas aims to drive growth primarily in Europe and Latin America.
“Adidas is transitioning from a global assortment strategy to a more localized approach,” explained Yanmei Tang, an analyst with Third Bridge. “This new strategy empowers individual markets to request tailored collections that cater to specific accounts.”
How does Adidas match up with its peers?
The latest numbers out from Adidas position it well within the top quartile of companies in the Consumer Discretionary sector. Measurements like return on equity and net change in cash show the company outperforming close peers.
Adidas shares had a good first quarter this year, but have been somewhat rangebound since the middle of April. Indeed they will have delivered good returns to those happy trading the stock between EUR 210 and EUR 240. The market can’t make up its mind on this one – yet.
We think there is some upside to be had from Adidas however, with a price target of as much as EUR 280 looking realistic. We have seen a decent uptick in revenue from the last set of Adidas results plus the earnings per share looks respectable. The EBITDA margin is also edging up.
Calculations by AI stock research specialist Bridgewise below show that Adidas overall looks like a good bet against some serious competition in the European fashion apparel space.
How are Adidas shares trending?
We ran some medium term analysis on the Adidas share price using the Trend Intelligence technical analysis software. Trend Intelligence price overlay indicators (first chart below) show the Adidas share price trading above the two Trend moving averages, which remain in a fully positive configuration. Also notice that the share price is trading above the Japanese Cloud indicator, and its representative Delay Line is also above the cloud. The most recent Japanese Average Candle is red. The overall trend signal from the first chart is positive.
The next chart, the D* Momentum Indicator, is also positive, while the third chart, the R* Momentum Indicator, is neutral. The indicator itself is displaying negative, with the white signal line also negative. The data points are trending downwards.
The final chart is the M* Momentum Indicator, which is neutral. The fast red M* line is trading below the both the white and blue signal lines.
What does this mean for Adidas shares? The medium term outlook from Trend Intelligence is that the stock price will continue to exhibit a weak positive trend in the weeks ahead. The trend summary shows price action operating above two moving averages and the Japanese Cloud. The momentum indicators are producing mostly neutral signals, but are trending downwards, inferring higher downside risks.
