Adidas upgraded as Bernstein is bullish on Messi’s move to Miami

Adidas (OTCQX:ADDYY) is likely to benefit from Messi’s stateside signing just as lingering impacts of Yeezy inventory write-downs and executive uncertainty roll off, according to Bernstein.

Equity analyst Aneesha Sherman explained that a move to the MLS for a star like Lionel Messi should spark sales  while a rebound in China should also stabilize trends. Easing supply chain and inventory issues are also likely to allow for margin expansion, she explained. 

These factors are also likely to solidify new CEO Bjorn Gulden in his role and allow him to pursue a turnaround, Sherman told clients.

“Gulden’s track record of turning around brand heat at Puma, and his focus on brand heat as a core part of what he wants to revitalize at Adidas, made us optimistic but we wanted to see signs that this was working – and over the past couple of months we have been monitoring for signs that the management of the brand is improving,” she noted. Improving brand strength is going to be critical for the company (and the stock) to work, to drive rapid share gains, reclaim prime real estate on retailer shelves, increase full-price selling, and create a path to LT growth and margin accretion.”

As such, she moved her rating from Market Perform to Outperform and hiked her price target to €190 from a prior €155.

“After months of deterioration, the brand is heating up. Chinese influencers and KOLs are back, Samba and T-toe style driving strong interest, last week’s Yeezy shoes launch sold out without backlash to the brand, and this week’s news of Messi (with Beckham) in Miami bodes well for US share gains,” Sherman concluded. “From our channel checks in US, Europe and China this week, retailers are still heavy on inventory but have under-ordered for H2 and expect to clear most stock by end of year, setting up 2024 well for growth.”

Shares of Adidas (OTCQX:ADDYY) stock listed in Frankfurt flew 5% higher in afternoon trading. 

More on Adidas:

Adidas stock runs higher on inventory improvement, reaffirmed forecasts

adidas to begin selling Yeezy inventory by end of May

Adidas and Beyoncé reportedly agree to part ways

adidas: Can The New CEO Deliver?

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