Investing.com -- Piper Sandler on Monday began coverage on Adidas (ETR:ADSGN) (OTC:ADDYY) shares with an Overweight rating and a €265 price target, voicing confidence in the company’s earnings growth trajectory and highlighting limited exposure to trade-related risks.

The brokerage sees attractive risk-reward in Adidas shares, supported by solid sales and earnings momentum heading into 2025.

Piper Sandler analysts note that the stock trades at 9x EV/EBITDA and 19x price-to-earnings (P/E) on 2026 estimates, while expecting average earnings per share (EPS) growth of around 50% over the next two years.

They also point to Adidas’s broad but shallow product lineup as a strategic advantage that helps the company navigate changing consumer preferences.

Piper Sandler highlights North America as a key area for both market share and margin improvement. The region accounts for 22% of Adidas’s total sales but contributes just 11% to operating income, with EBIT margins still well below 2021 levels despite recent gains.

The brokerage firm estimates that Adidas holds a 13% share of the North American athletic footwear market in 2024, down about 400 basis points compared to 2019. It models low double-digit growth in the region for both 2025 and 2026, which would imply a recovery to 15% market share by 2026.

“Our sensitivity analysis suggests for each 1-point gain in North America share, Adidas sees ~15 bps of EBIT margin expansion and ~€0.35 in EPS,” analysts led by Anna Andreeva said.

The sportswear giant’s goal of a 10% operating margin by 2026 was also underlined, based on gross margins (GM) of 50–52% and disciplined cost controls.

“At 50.8%, Adidas’s GM are ~100 bps above recent averages but 200 bps below ‘18/’19 and should have upside as the company drives full price business/Apparel share further,” the analysts continued.

Despite a 13% year-to-date share price decline, the analysts see the stock’s valuation as attractive, especially with YEEZY-related headwinds now in the past and strong momentum across both Lifestyle and Performance categories.

“Adi’s broad portfolio gives downside support,” the report said, pointing to the growing popularity of new running models like the Adizero EVO SL as older Terrace franchises mature.

Piper Sandler expects sales of €25.9 billion and EPS of €7.10 in 2025, followed by €28.5 billion in revenue and €10.50 in EPS in 2026. The €265 target implies a multiple of ~25x 2026 EPS, which Piper views as a modest premium to peers but justified given Adidas’s earnings trajectory.