Adidas stock forecast: will Adidas ever “own the game”?
Adidas stock forecast: can it ever compete with Nike?
Adidas is a global brand whose infamous three stripes logo has appeared on the world’s most famous sportsmen and women.
It is the holding company for the Adidas Group, which also includes the Reebok sportswear company, 8% of the German football club Bayern München, and Runtastic, an Austrian fitness technology company.
The company was founded by Adolf Dassler in his mother's house in 1924, when he started making running shoes.
Nowadays, Adidas is the world’s second largest sportswear manufacturer.
And as it emerges from lockdown, it is starting to ask itself why it has struggled to maintain a lead on its main rival Nike.
Adidas stock predictions 2021 – dealing with lockdown
Adidas weathered the worst of the COVID-19 pandemic by increasing sales of its footwear by 31% during the first quarter of 2021.
The company, which has its headquarters in Herzogenaurach, Germany, and employs over 60,000 staff worldwide, upgraded its expectations for 2021 in early May.
Its CEO attributed this to Adidas being “fast out of the gate” at the beginning of the year.
Kasper Rorsted, CEO of Adidas, said he was confident the company could bounce back from the pandemic, “even though the environment is not yet back to normal”. He also told shareholders the company remained committed to “own the game” until 2025.
ADS stock price forecast
Adidas’s growth during the first quarter of 2021 came from increasing sales of its footwear, which rose 31%.
Its quarterly net income was €554m (US$669), a 2,050.4% increase during the same period in the previous year
It needs to be noted that lockdown meant the business was barely profitable in the first quarter of last year.
If using the first three months of 2019 as a comparison, sales fell 19% in 2021.
Adidas’s operating profit, however, increased to €704m, compared with €48m in the first quarter of last year.
Growth was reported in all of Adidas’s markets, with a 156% rise (in currency-neutral sales) in China.
Sales in both North America and Europe, Middle East and Africa (EMEA) rose by 8%, while sales rose by 18% in Latin America and by 4% in the Asia-Pacific region.
Adidas’s e-commerce sales worldwide rose by 43%, as its online sales operation was able to ramp up to meet pandemic demand.
Adidas stock forecast
Lockdowns due to the COVID-19 pandemic impacted on its store opening rate in Europe, which fell below 50% in March.
However, strategic partnerships, including a deal signed with US watchmaker Timex, and its plans to sell off Reebok, the sports brand it bought 15 years ago, may help boost Adidas’s coffers and help the Adidas share price.
Adidas – selling Reebok and making watches with Timex
Adidas bought Reebok, which was founded in Bolton, UK, in 1958, for just over €3bn.
The now US-based company continues to struggle against its rivals and is expected to be sold for under €2bn.
Likely buyers of Reebok include VF Corporation, the owner of North Face and Timberland; Anta Sports, the Chinese sportswear firm; and Authentic Brands, the owner of Forever 21, Nine West and Juicy Couture.
The Guardian newspaper in the UK reported that Mike Ashley’s Frasers Group, which has a history of buying troubled British brands, might also be in the running.
Adidas is hoping its tie-up with Timex will help extend its reach to millennials and Gen Z.
Under the agreement, Timex Group will design, manufacture and distribute watches worldwide under the Adidas Originals brand. The first products will be rolled out in spring 2022.
Adidas stock analysis – in need of more recovery
Even while lockdown eases and consumers opt to go back to the shops, the outlook for Adidas and the Adidas share price forecast will depend on how much of a march it can steal on its far bigger rival, Nike.
So, while the outlook for 2021 is good for Adidas, it will need to continue innovating and keep its eye on the competition.
Trade Adidas AG - ADS stock price
Adidas share price forecast 2021 – is Adidas stock a good buy?
The Adidas stock price has remained fairly steady over the last few months. Many analysts have put it on a hold as they wait to see what happens to retailers as lockdown lifts.
One thing that Adidas can capitalise on, and has done so, is the trend towards working from home, something the COVID-19 pandemic has accelerated.
This has led to a dramatic change in spending habits, particularly on clothes and footwear, as consumers demand more casual attire.
Adidas stock forecast 2021 – leisure wear as workwear?
This is expected to continue as suits are ditched in favour of sportswear. Adidas has several long-term collaborations with designers including Stella McCartney, which combine sportswear with more formal athleisure-style apparel that can double up as workwear.
Chris Beckett, head of equity research at Quilter Cheviot, said: “Adidas has continued to rebound strongly from the pandemic and is exhibiting exceptional growth particularly in China, with supporting performance coming from developed markets.
“The non-China Asia market remains subdued so it is worth keeping an eye on that but for now the brand appears to have a credible strategy and will continue to gain market share due to its strength of proposition.
“Margins will continue to improve as normality is restored and it continues to grow its direct to consumer sales. Adidas also recently showcased some innovation in its product range which is going to be vital in its battle against Nike.
“It has lagged its American counterpart of late so it will be interesting to see if it can close the gap in this regard.”
ADS stock forecast – is Adidas stock overvalued?
A median price taken from a poll of 28 analysts offering 12-month price forecasts for Adidas AG put the share price at €186.59, with a high estimate of €220.38 and a low estimate of €147.47.
The median estimate represents a 7% increase from the last price of €174.01 (12 May 2021).
While the Adidas share price is looking like reasonable value, however, investors may need to hold off for now, as Beckett notes that there could be some issues with Adidas’s supply chain.
“There are also some risks that management are keen to temper expectations on. Congestion at ports, disruption caused by the Chinese consumer boycott and higher freight costs will have an impact both on margins and sales.”
He is also concerned that while Adidas might see stronger sales growth and a return to a double-digit operating margin in 2021, over the longer term, analysts expect stronger margins.
“We will also be looking for explanations on how the business can close the gap on Nike.
“It has lagged in its product offering compared to its American counterpart, so it will be interesting to see if they have any product innovation in the pipeline or if they remain content with the current brand.
“But if it gets its product offering right then these should be negated and growth should continue.
“The direct to consumer offering continues to grow and with a strong brand in place and solid digital infrastructure, it should continue this growth in 2021 and beyond and we continue to believe it is a good quality business.”
ADS stock – how can I trade in Adidas shares?
If you’re feeling positive about Adidas’s prospects, you might want to consider investing in the company. Stock can be purchased on a share dealing website outright, or through Currency.com in the form of a tokenised asset. A tokenised asset enables you to buy Adidas shares using a blockchain token (or security token). Currency.com can provide you with dozens of technical indicators and analytical tools, as well as real-time price alerts and cutting-edge charts.
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