Adidas (
ADDYY) ADRs are higher Friday, following a bullish note from
Oppenheimer.
Analysts
Anna Andreeva and
Samantha Lanman initiated coverage of adidas with and Outperform rating, writing that while double-digit top- and bottom-line growth is increasingly rare in the retail sector, adidas is guiding for 11% to 13% sales growth this year, and that looks conservative.
They believe that the “retro/lifestyle trend” that adidas dominates is still in early days, and its performance products means it has a double-digits sales growth runway for years to come (with the company overtaking
Nike (
NKE) in running within in the company’s 2020 targets).
The write that adidas is ‘back on the offense’ in North America, with more good news to come. From their note:
At ~40% of adidas’ brand, Lifestyle contributed ~2/3 of growth last year; focus on Performance paying off, with successful Boost franchise (15M pairs in ’16, up 25% y/y) driving Running. Estimate adidas surpasses NKE in Running by 2020 (NKE Running in North America declined last quarter); correcting under-supply with BASF, Boost manufacturer, provides additional upside.
ADS in North America is still only 1/4 size of NKE (60% globally), with HSD share in footwear well below 15%+ elsewhere. Double-digit momentum started only last Spring (ex-FX, ’16 sales up mid-20s); in wholesale, ADS is approaching distribution methodically with focus on growing productivity over door expansion (sales/wholesale door still half of NKE).
The ADRs are up 0.4% to $94.36 in recent trading