Adidas Earnings: Strong Preliminary Results Confirmed; 2025 Outlook Is Reasonable; Shares Overvalued

Narrow-moat Adidas’ fourth-quarter and full-year final results matched the preliminary results released Jan. 21 (see our previous note). The firm offered 2025 guidance for high-single-digit currency-neutral sales growth that aligns with our forecast. Although our operating profit estimate of EUR 1.85 billion is a bit higher than the guidance range of EUR 1.7 billion-EUR 1.8 billion, the effect on our valuation is immaterial, and CEO Bjørn Gulden has consistently offered conservative guidance. As such, we are not changing our EUR 180/$94 fair value estimate (excluding currency variation), which we raised from EUR 173/$93 in January. We believe the shares are overvalued. Adidas is recovering from past missteps and exploiting wide-moat Nike’s woes, but profitability remains subpar, and the shares have more than doubled since Gulden was poached from rival no-moat Puma in late 2022.