Adidas' Turnaround Takes Shape: BofA Lifts Rating as Stock Breaks 200-Day Line and Buyback Expands

BofA upgrades Adidas to Neutral, raises target to €172, citing strong Q1 earnings and brand momentum. Stock breaks above 200-day MA, up 12.9% in month.

Bank of America has abandoned its bearish stance on Adidas, upgrading the stock from “Underperform” to “Neutral” on May 28 and hiking the price target to €172 from €145. Analyst Thierry Cota cited greater confidence in the company’s earnings trajectory and brand momentum across core markets — a notable reversal after the brutal downgrade from “Buy” to “Underperform” in January, when growth slowdown and intensifying competition dominated the narrative.

The timing aligns with a powerful technical breakout. Earlier this week, Adidas shares closed at €168.50, pushing back above the 200-day moving average for the first time since March 2025. That milestone capped a weekly gain of 7.86% and placed the stock 29% above its April trough of €130.60. On the day of the upgrade, the stock dipped slightly to €168.05, down 0.27%, but the broader trajectory remains upward — the equity has rallied 12.90% over the past month, even if it still sits 23.54% lower year-to-date.

The recovery rests on solid first-quarter fundamentals. Adidas reported currency-adjusted revenue of €6.59 billion, up 14% year-on-year, while operating profit climbed 16% to €705 million. The operating margin improved to 10.7%, and net income from continuing operations reached €484 million. Apparel led the charge with a 31% currency-adjusted jump, followed by accessories at 13% and footwear at 4%, painting a picture of broad-based demand rather than a single-category miracle.

Direct-to-consumer channels provided an extra jolt. Global DTC sales rose 22% year-on-year, with e-commerce surging 25%. CEO Bjørn Gulden highlighted the company’s discipline on discounting — a sharp contrast to rival Nike, which has lost nearly 30% of its value since the start of 2026.

The upcoming World Cup in the United States, Canada and Mexico adds another layer of momentum. Adidas will supply the official match ball and outfit 14 national teams, beating Nike’s 12. The return of the Trefoil logo to away kits — appearing on shirts of 25 partner federations for the first time since 1990 — has already boosted performance revenues by 29% in the first quarter, driven by football, running and training. Germany’s DFB plays an emotional role: this summer’s tournament marks the last Adidas kit before Nike takes over, and retailers like Sport 2000 and Intersport expect a repeat of the high unit sales seen in 2024.

Adidas is simultaneously strengthening its balance sheet. In May it placed a €500 million bond and is executing a share buyback program of up to €1 billion. Total shareholder returns for 2026 are projected to reach €1.5 billion, including roughly €500 million in dividends. The company’s full-year guidance calls for high single-digit currency-adjusted revenue growth, with headwinds from US tariffs and currency effects penciled in at around €400 million, and operating profit of approximately €2.3 billion.

From a chart perspective, the next challenge lies at €171.20. A clean break above that level would open the path toward €186.40, while the reclaimed 200-day moving average and an open gap near €157.50 serve as potential support on pullbacks. The next major reality check comes on July 30, when Adidas reports first-half results. For now, the message from Herzogenaurach is clear: the risks that frightened Bank of America in January are fading, and the market is beginning to price in a slower, more orderly decline in growth rather than a sudden collapse.