Adidas Stock Gains as Barclays Upgrades to 'Overweight', Citing Buying Opportunity

Shares of Adidas (ADSGn) gained 1.4% in early trading Wednesday after Barclays upgraded the sportswear giant to 'Overweight' from 'Equal Weight.' Analysts at the bank cited a compelling buying opportunity following what they described as "a perfect storm" for the broader sporting goods sector.

A Shifting Industry Landscape

Barclays analysts, led by Viktoria Petrova, argued in a note to clients that the era of a "global duopoly" in sportswear is over, and the industry's growth has structurally reset. The bank now forecasts the global sporting goods market will settle into a growth rate of roughly 4% through fiscal 2029.

Within this new framework, Barclays projects that rival Nike will grow around 1% annually, while the rest of the sector, including Adidas, could expand closer to 6%. The analysts believe 2025 will likely mark a market trough, pressured by a weak consumer environment and heavy promotional activity.

Catalysts for Adidas

Despite the difficult backdrop, Barclays stated that Adidas's margin recovery "is well under way and has room to continue." The bank highlighted several potential catalysts that support its upgraded rating:

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• Potential upside to the company’s guided €2.3 billion EBIT target for 2026.
• The possibility of further tariff refunds, which could help push its EBIT margin toward its 10% target as soon as this year.
• A new "beat-and-raise" cycle potentially starting in 2027.
• The company's upcoming "Home of Innovation" event scheduled for September 23-24.

Underestimated Turnaround

Barclays asserted that the market is underestimating that Adidas is "a much better managed company today." The analysts pointed to the company's positive market share momentum, a strengthened innovation pipeline, and its potential to benefit as Nike focuses on improving its own sales quality.

In contrast, the bank maintained its 'Equal Weight' rating on competitor Puma, citing "limited clarity of investment case" and a "wait-and-see mode" among investors, partly due to a pending stake acquisition by ANTA Sports.