Goldman Sachs raises adidas target price to €185, maintains Neutral

Overview

This report is a company research update published by Goldman Sachs ahead of adidas's 2Q26 earnings release. The report raises its 2Q26 and FY26 earnings forecasts and lifts the 12-month DCF target price from €165 to €185. Although high-frequency consumer tracking and performance in some regions support the earnings upgrade, the report maintains a Neutral rating because the current share price is already close to the target price, leaving only 2.3% implied upside.

Core views

The core view is that adidas's short-term sales momentum is stronger than previously expected, with the 2Q26E cFX growth forecast raised to +13.2%, supporting an increase in adjusted EBIT forecast to €620mn; full-year FY26E adjusted EBIT rises to €2,525mn. However, World Cup-related marketing investment suppresses the 2Q26E EBIT margin, while weaker Terrace series momentum, slowing U.S. DTC price growth, a negative new-product mix, and gross margin risks limit a more positive rating. The target price increase mainly comes from improved earnings, cash flow, and WACC assumptions, rather than a change in rating stance.

Analysis framework

The report combines top-down financial forecasting, DCF valuation, and multiple categories of high-frequency consumer data for its assessment. The financial section updates revenue, gross margin, EBIT, EPS, cash flow, and valuation multiples; the high-frequency section tracks Tmall trends in China, unique web visitors in the U.S. and globally, App MAU, Google Trends search interest, DTC.com pricing, new-product mix, and wholesale discount trends in the UK, U.S., and Germany; the valuation section uses a DCF framework and adjusts the WACC assumption.

Methodology notes

• Valuation methodDCF valuation

  Based on earnings and cash flow forecasts, discounting with WACC to derive the target price per share.

  Goldman Sachs lowered its WACC assumption from 11.5% to 11% and, together with earnings and cash flow adjustments, raised the 12-month DCF target price to €185.

• High-frequency data trackingConsumer and brand high-frequency indicators

  Using real-time or near-real-time consumption, traffic, and search data to help judge quarterly sales momentum.

  The report tracks Tmall, unique web visitors, App MAU, Google Trends, DTC pricing, new-product mix, and wholesale discounts to verify adidas's demand performance relative to competitors such as Nike, Puma, and On.

• Factor frameworkGS Factor Profile

  Comparing a stock's position relative to the market and industry peers across four dimensions: Growth, Financial Returns, Multiple, and Integrated.

  This framework uses Goldman Sachs analyst forecasts and standardized rankings to convert growth, financial returns, and valuation multiples into percentiles, providing factor context for the stock.

• M&A frameworkM&A Rank

  Using a rating from 1 to 3 to assess the probability of a company becoming an acquisition target.

  adidas has an M&A Rank of 3, representing a low-probability range of 0%-15%; according to Goldman Sachs, this rating is typically not included in target price calculations.

• Database toolQuantum

  Goldman Sachs's proprietary financial database.

  Quantum is used to access detailed financial statement history, forecasts, and ratios, supporting both in-depth single-company analysis and cross-industry company comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• adidas (ADSGn.DE)

  Core covered asset, German-listed stock

  Strengths

  Continues to outperform Nike and Puma in the China market; strong growth in unique web visitors; U.S. web visitors accelerated as the FIFA World Cup approaches; App MAU accelerated slightly; some wholesale discount trends in the UK, U.S., and Germany are below or close to 2025 levels.

  Weaknesses

  Search interest in the Terrace series continues to decline, and Superstar has not yet formed clear momentum; U.S. DTC pricing year-over-year growth has begun to slow; new-product mix has turned negative year over year; World Cup marketing investment suppresses short-term EBIT margin.

  Comparison

  Relative to Nike, adidas is stronger in China and on some App/web metrics, while Nike App MAU remains clearly negative; relative to Puma, the report says adidas continues to outperform in China; in global search interest, the gap between adidas and Nike narrowed during the month.

  Risks

  cFX sales, demand and market share in the U.S. and Greater China, U.S. margin improvement, key brand ambassadors, shelf space at retail partners, discounting activity, and gross margin are all upside and downside risks to the target price.

Key data

• 12-month target price€185 (previously €165)Derived from DCF; corresponds to about 11.4x 2026E EV/EBITDA and 19.2x P/E.
• Current price€180.90Price disclosed in the report, implying 2.3% upside to the target price.
• Analyst ratingNeutralThe Neutral rating has been maintained since September 26, 2022.
• 2Q26E adjusted EBIT€620mn (previously €604mn)Raised based on higher cFX growth and smaller FX headwinds.
• 2Q26E cFX growth+13.2% (previously +10.7%)Used to support the quarterly earnings preview.
• 2Q26E FX impact-1.7% (previously -3.2%)The foreign exchange headwind assumption has narrowed versus previously.
• 2Q26E gross margin51.2% (YoY -50bps)Reflects lower U.S. tariff and FX pressure than in 1Q.
• 2Q26E EBIT margin9.4%Affected by increased World Cup-related marketing investment.
• FY26E adjusted EBIT€2,525mn (previously €2,500mn)Full-year forecast raised slightly.
• FY26E revenue€26,695.4mnNew forecast disclosed in the table, above the old forecast of €26,411.4mn.
• FY26E EPS€9.64Above the old forecast of €9.53.
• FY26E P/E18.8xBased on the report forecast.
• FY26E FCF yield4.9%Cash flow forecast improved.
• Market capitalization€32.3bn / $36.9bnDisclosed in the report's Key Data.
• Enterprise value€36.7bn / $41.9bnDisclosed in the report's Key Data.
• 3-month ADTV€103.3mn / $120.0mnDisclosed in the report's Key Data.
• DCF per-share valuation€185The DCF summary includes NPV of €32,987mn, total valuation of €32,040mn, and 174mn shares.
• Long-term growth rate assumption3.0%Disclosed in the cash flow and valuation section.
• M&A Rank3Represents a low M&A probability and is typically not included in the target price.

Impact & implications

The report's investment implication for adidas is broadly neutral: improved earnings and cash flow forecasts, a lower WACC, and several high-frequency demand indicators support a target price increase, but the share price is already close to the target price, making the risk-reward less compelling. If the July 30 2Q26 earnings validate Goldman Sachs's upgraded assumptions for cFX growth, gross margin, and EBIT, the market may further confirm adidas's sales momentum; conversely, if Terrace momentum fades, DTC price growth slows, or discount pressure expands, the scope for gross margin and valuation improvement may be limited.

Risks

• adidas cFX sales come in below or above expectations, affecting revenue and EBIT forecasts.
• Demand or share gains in the U.S. and Greater China markets fall short of expectations.
• U.S. margin improvement is weaker than expected, undermining gross margin and EBIT margin.
• Loss of key brand ambassadors or insufficient brand exposure affects product momentum.
• Changes in shelf space at key retail partners may affect wholesale channel performance.
• Increased discounting activity may pressure gross margin, especially in wholesale discount trends in the U.S., UK, and Germany.
• If World Cup-related marketing investment is higher than expected, it may continue to weigh on short-term margins.
• Declining search interest in the Terrace series, Superstar failing to gain momentum, and a negative new-product mix may signal product cycle risk.
• If FX and U.S. tariff pressures increase again, they may offset the improvement in the current forecasts.

What to watch

• Whether adidas's July 30 2Q26 earnings validate the €620mn adjusted EBIT forecast.
• Whether 2Q26 cFX growth reaches +13.2% and whether FX headwinds are close to -1.7%.
• Whether gross margin reaches 51.2% and whether EBIT margin remains around 9.4%.
• Whether FY26 guidance supports €2,525mn adjusted EBIT and a 9.5% EBIT margin.
• Whether high-frequency demand indicators such as China Tmall, U.S. and global unique web visitors, and App MAU continue to improve.
• Changes in Google Trends search interest related to World Cup, Adidas football, Terrace, Samba, Gazelle, Spezial, Superstar, and Campus.
• Whether U.S. DTC price growth, new-product mix, and wholesale discounting activity continue to weaken.
• The impact of wholesale discount trends in the U.S., UK, and Germany on gross margin.
• The sensitivity of the DCF target price to changes in WACC, long-term growth rate, and cash flow forecasts.
• Key brand ambassadors, retail partner shelf space, and the relative performance of competitors Nike, Puma, and On Holding.