In key news on German stocks, Adidas AG (DE:ADS) shares gained after a double upgrade from Morgan Stanley, driven by favourable momentum for the company’s lifestyle shoes, especially the terrace trainers range, which includes models like Gazelle, Samba, and Spezial. Analyst Edouard Aubin from Morgan Stanley upgraded his rating for ADS stock from Sell to Buy and significantly raised the price target from €175 to €235.
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The new price target implies an upside of 15% from the current price of €204.6. Post-upgrade, Adidas shares gained 4.18% on Monday.
Adidas is a prominent global sportswear manufacturer, well-known for its footwear and other sports lifestyle products.
Morgan Stanley’s Bullish Stance on Adidas
Aubin and his team noted that there is a shift in footwear fashion trends from bulky shoes to a more relaxed style of sneakers. This bodes well for the Adidas range of terrace trainers, featuring gum rubber soles. Aubin was earlier concerned over the long-term viability of the fashion trend, considering its smaller scale. However, as per the latest data checks by his firm, there is a prevailing “positive sentiment” surrounding Adidas’ products. Moreover, the terrace shoes have gained popularity in the U.S., where they initially received a lukewarm response.
Morgan Stanley also lauded the company’s CEO, Bjørn Gulden, for rightfully seizing the terrace trend by introducing different colors and patterns to sustain the excitement.
Analysts further hope that Adidas could capitalize on the innovation setbacks at its U.S.-based competitor, Nike (NYSE:NKE), by strategically pricing its products. Nike’s Q3 earnings report depicted flat sales and analysts believe the company must prioritize innovation to attract more consumers.
Is Adidas a Good Stock to Buy?
On TipRanks, ADS stock has a Moderate Buy consensus rating, backed by 11 Buy, 11 Hold, and three Sell ratings. The Adidas share price prediction is €198.68, which is 2.7% below the current price level.
