RBC Upgrades Adidas Stock to Outperform on Strong Growth Outlook
RBC Capital Markets upgraded Adidas AG to “outperform” from “sector perform” and increased its price target to €210 from €170. The investment bank believes the German sportswear giant remains undervalued despite its strong earnings growth prospects.
According to RBC, Adidas currently trades at around 13 times projected FY2027 earnings, representing a 13% discount compared with its Western sporting goods peers. This comes despite the company having the highest expected three-year earnings-per-share growth rate among stocks covered by the broker.
Strong Performance Under CEO Bjorn Gulden
Since CEO Bjorn Gulden took charge in January 2023, Adidas shares have gained roughly 30%. However, the stock remains well below its February 2025 peak, when shares traded at nearly double current levels.
RBC argued that the market is still underestimating Adidas’ operational progress and ability to deliver long-term growth.
“Adidas’ strong execution is not getting the recognition it deserves,” the broker stated in its report.
Earnings Growth Forecast Stands Out
RBC expects Adidas to deliver a three-year earnings-per-share compound annual growth rate of 25%, significantly above the 11% average across the firm’s coverage universe.
The broker also highlighted Adidas’ attractive valuation, noting that its price-to-earnings growth ratio remains among the lowest within the luxury and sporting goods sector.
Revenue and Profit Expectations Raised
For fiscal year 2026, RBC forecasts revenue of €26.63 billion and adjusted EBIT of €2.45 billion, implying an operating margin of 9.2%. Both figures are ahead of the company’s current guidance.
Adidas reported 14% organic revenue growth during the first quarter of 2026, including a boost from World Cup-related demand. RBC expects another strong quarter, forecasting approximately 13% organic revenue growth in the second quarter.
The broker also increased its FY2027 revenue forecast by 1% to €28.75 billion and raised its earnings-per-share estimate by 5% to €12.42. These projections remain above current market consensus estimates.
Margin Expansion Expected Through 2027
RBC believes Adidas will continue improving profitability over the next several years. Gross margin is projected to rise to 52.3% by FY2027, supported by favorable foreign exchange hedging benefits.
While sourcing and logistics costs may create some headwinds, the broker expects currency-related advantages to more than offset those pressures.
Adidas has guided for EBIT margins of approximately 10% in FY2027 and above 10% in FY2028. RBC forecasts margins of 10.4% and 10.8% respectively, suggesting further upside potential.
Track Record of Beating Guidance
One of the key factors supporting RBC’s bullish view is Adidas’ consistent history of outperforming its own forecasts.
Since FY2023, the company has repeatedly exceeded guidance. Adidas initially projected near-break-even EBIT for FY2023 but ultimately delivered €201 million. For FY2024, management guided around €500 million and later reported €1.34 billion. In FY2025, the company surpassed guidance once again, delivering €2.06 billion in EBIT.
Market Share Recovery Continues
Adidas is also making progress in rebuilding market share across key product categories.
Between 2024 and 2025, the company regained market share in both sports footwear and sports apparel. Global sports footwear share rose to 11.2%, while sports apparel share increased to 5.9%.
Although these figures remain below historical peak levels, RBC sees further room for gains as Adidas continues to strengthen its product lineup and brand positioning worldwide.
Price Target Based on Long-Term Valuation Model
RBC’s €210 price target is based on a discounted cash flow valuation model using a weighted average cost of capital of 8.5%, a terminal growth rate of 2.5%, and a risk-free rate of 3.5%.
The broker believes Adidas’ combination of accelerating earnings growth, improving profitability, and recovering market share supports a more optimistic valuation outlook over the coming years.
