- Jefferys raised her price target to €223 ($272).
- The sneaker company has had strong share performance since 2015.
- It has found a way to take advantage of differentiated products, quick market turnaround, and online sales, which should drive further upside, she said.
- Adidas is a European company
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Adidas has found a way to 'fully exploit' its online opportunity — and it could make a killing
A Macquarie analyst lists several ways the company could drive double-digit earnings growth.
As retailers are struggling to compete online, Adidas is "fully exploiting the digital opportunity."
That is likely to sustain its double-digit earnings growth, according to Lauren Jefferys, a Macquarie analyst. But that is just one thing the German sneaker company is doing right, she said.
The company's emphasis on quality growth and margins will boost its stock performance, she said. The weak US dollar, a potential share buyback on its strong cash position, and its encouraging 2018 outlook should also prop up its stock.
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Additionally, Adidas offers a new and differentiated product portfolio, reacts quickly to market demand, and its clear strategy under CEO Kasper Rorsted will keep it at its highs, she said. The company has also gained in popularity in China and the US, edging out competitor Nike's dominance, which has been criticized for its slow production and failed attempts to get consumers to bite at its trendy offerings.
Adidas' surging growth in the US, which has gone up 6% to 11% in sales, has spooked competitors. The brand's focus on scale and its ability to recognize trends before they happen has driven profits, according to Mark King, Adidas' head of North America.
Jefferys raised her price target on Adidas to €223 ($272) per share, about 22% higher than the company's current price of €182.
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