MW Adidas has 'brand heat,' analysts say. It's a hot stock, too.

By Steve Goldstein

Adidas shares rally after better-than-forecast results

Adidas stock rallied on Wednesday as the apparel maker said its fourth-quarter results would come in ahead of estimates.

In a preliminary look at the final quarter, Adidas said its revenue rose 24% to EUR5.97 billion ($6.2 billion), that its gross margin rose 5.2 percentage points to 49.8%, and that it swung to an operating profit of EUR57 million. Analysts had expected a EUR38 million operating loss in the fourth quarter on sales of EUR5.46 billion, according to Visible Alpha.

Adidas stock (XE:ADS) jumped 6% to hit a new 52-week high and has surged 56% over the last 52 weeks.

Its sales growth was 18% at constant currencies and excluding about EUR50 million of Yeezy sales. Adidas discontinued its partnership with Kanye West's Yeezy brand in 2022 over antisemitic comments; based on previous comments the company's made, Adidas looks to have completed selling out its inventory of the gear.

Adidas CEO Bjorn Gulden said he was "very pleased" given that the quarter in general was difficult for the trade. "We clearly see that consumers' and retailers' interest in our products is growing across both lifestyle and performance," he said in a statement.

Analysts were ebulliant. "Our buy case on Adidas is built on increasing brand heat, positive earnings momentum and strong EPS growth. All of this is evidenced again in the fourth quarter," said Deutsche Bank analysts led by Adam Cochrane, who lifted their 2025 earnings per share expectations by 7% and 2026 EPS expectations by 9%.

JPMorgan analysts led by Olivia Townsend also talked about Adidas's "brand heat" as they lifted their operating profit estimates by 2.5% on average for the next three years.

The Adidas news didn't carry over to rivals: Puma shares (XE:PUM) edged higher in Frankfurt as Nike stock $(NKE)$ inched higher in premarket trade.

Adidas will release its full set of results on March 5, when it will also release 2025 guidance. Adidas did confirm its goal of double-digit growth for this year.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 22, 2025 05:03 ET (10:03 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.