Adidas Shares Have A Rough Week, Analyst Cuts Price Target But Remains Bullish

Adidas shares (ETR:ADS) are under pressure this week, down 16.97% on the week leading into the final trading day, falling sharply after the sportswear giant warned that new U.S. tariffs could cost the company $231 million in the second half of 2025.

The stock, which closed at EUR 168.05 on the Xetra, extends a decline which dates back to the start of the year, with Adidas' share price down 29% YTD.

The catalyst for the sell-off was Adidas's announcement that new U.S. tariffs on goods imported from Vietnam and Indonesia, key manufacturing hubs for the company, are expected to add approximately €200 million to costs in the second half of the year.

Despite reporting a near doubling of quarterly profits to $402 million, this tariff warning triggered immediate investor concerns.

Adidas reported a 2.2% increase in net sales to €5.95 billion for the second quarter, falling short of analyst expectations of €6.2 billion. Despite this, the company achieved a stronger-than-expected operating profit of €546 million and a gross margin rise to 51.7%. However, the modest sales growth and external challenges have raised concerns among investors.

UBS responded to the news by lowering its price target on Adidas shares from EUR 279 to EUR 274, while maintaining a “Buy” rating.

This adjustment reflects a belief that the company will eventually navigate these challenges, but acknowledges the near-term headwinds facing the stock. The reduced price target still represents a significant premium over the current share price, suggesting UBS anticipates a medium- to long-term recovery.

CEO Bjørn Gulden addressed the tariff concerns, highlighting the uncertainty surrounding the final tariff structures and their potential impact on consumer demand and inflation. In response, Adidas has increased U.S.-bound shipments, leading to a 16% rise in inventory levels to €5.26 billion. This proactive measure aims to mitigate potential supply chain disruptions but also introduces the risk of increased storage costs and potential obsolescence if consumer demand weakens.

Analysts project Adidas will earn EUR 7.67 per share for 2025. The company's ability to manage the impact of tariffs and maintain its profit margins will be crucial in determining whether it can meet these expectations. The market will be closely watching Adidas's pricing strategy in the U.S. and its ability to offset increased costs through operational efficiencies.