MASTERS IN FINANCE ADIDAS AG COMPANY REPORT FOOTWEAR AND APPAREL 3 JANUARY 2017 STUDENT: PEDRO PEREIRA
[email protected] Sustaining “Brand Momentum” Recommendation: BUY Riding the Athleisure and E-commerce trend Price Target FY18: 222.33 € . After a careful evaluation, our investment recommendation for Adidas AG is BUY, with a target price of Price (as of 31-Dez-17) 167.15 € EUR 222.33, while the current stock price trades at EUR 167.15. Bloomberg: ADS:GR For the last 3 months, the stock decreased 13%, which represents 52-week range (€) 142.60-202.10 a good opportunity to buy the stock. Market Cap (€b) 34.970 Outstanding Shares (m) 209.216 . Share: The company stock price clearly outperformed the German stock index DAX-30, yielding a total return of 173% in the Source: Bloomberg last three years. This development was mainly driven by the continuously release of strong financial performances (revenue growth rate of 16% and 14% in 2015 and 2016, respectively) . Growth: Adidas is focused to increase sales growth by driving brand desirability through product innovation, as well as by focusing on several strategic growth areas such as womenswear, athleisure, e-commerce, greater penetration of the North America and Greater China market. The company is also committed to In % based on 100% at 31th December 2014 Source: Bloomberg improve margins in order to close the gap to its major rival, Nike (EBITDA margin of 16% vs 8% for Nike and Adidas, respectively) . Valuation: The YE18 price target is based on a DCF (Values in € millions) 2016 2017E 2018F Revenues 19,291 21,529 23,743 analysis of Adidas.