PARIS (dpa-AFX) - A settlement between Europe's athletic footwear giant Adidas and fashion market leader Inditex has triggered a change of sides at French investment bank Exane BNP Paribas. In addition, the stock of Adidas competitor Nike was also downgraded.

After he had given clear preference to Zara parent Inditex twelve months ago, Adidas shares are now his favorite, analyst Warwick Okines wrote in a study available on Tuesday. Accordingly, he upgraded the stock of German sporting goods maker Adidas to "outperform" from "neutral" and raised his price target to 210 euros from 170 euros. At the same time, he lowered his investment rating for Inditex from "outperform" to "neutral" and maintained his price target of 36 euros.

The upside potential for Adidas would thus currently still be around 14 percent, after the share is currently up almost 6 percent following key figures, raised annual targets and the Exane study. For Inditex, the maintained price target would still mean an upside potential of just under 6 percent.

A year ago, he compared Adidas and Inditex, and the earnings performance of the two could not have been more different since then. While Adidas' profits were dwindling, Inditex had consistently beaten forecasts and increased profits. Now, however, the tide is turning, he wrote.

After re-evaluating social media data, app usage and internet searches, he concluded: The Adidas brand is picking up steam again. As the brand gains momentum, Okines believes the company can quickly recover profitability. "Gross margins should strengthen earnings power in the process," he expects. His earnings estimate for 2024, for example, is now about 30 percent higher than the average expectation in the market.

Looking at Inditex, which includes the brands Zara, Massimo Dutti and Bershka, Okines now sees little scope for increasing forecasts. Ebit margins are back at a ten-year high, he said, and the company's borse value is near record levels.

At Adidas competitor Nike, demand is cooling off, the Exane analyst also quotes his colleagues in the US. These downgraded the shares of the U.S. sporting goods manufacturer this Tuesday from "Neutral" to "Underweight" and cut the price target by 7 U.S. dollars to 92 dollars.

With an "outperform" rating, analysts at Exane BNP Paribas expect the stock to outperform the sector over the next twelve months. According to them, the share should develop in line with the sector with a rating of "Neutral", while "Underperform" means that the stock should develop worse than the sector. A period of twelve months always applies./ck/bek/jha/

Publication of the original studies: 07/25/2023