adidas AG is likely to continue enjoying improved profit and sales over the coming years after unveiling stronger first-quarter trading earlier this week, analysts have said.
adidas bumped up full-year guidance midweek after beating first-quarter expectations on stronger profit margins and sales of footwear products.
Though adidas increased profit guidance to roughly €700 million (£599 million), Deutsche Bank estimated the figure could actually sit higher at €1.1 billion.
This is because adidas assumed no further profits from remaining sales of Yeezy products following the firm’s split with Kanye West, while better foreign exchange rates could also help.
adidas still has around €150 million worth of Yeezy products left to sell and negative foreign exchange translation dealt around a 4% blow to profits, according to Deutsche.
Alongside this, analysts noted adidas had not factored in a recovery over the remainder of the year.
“We think this is one of the best indications of the adidas brand heat - selling more products at full price,” Deutsche said.
Deutsche reiterated a ‘buy’ rating and €250 share price target, or 10.6% above Thursday’s close.
“In our view we are still at the beginning of a multi-year improvement in the sales and profit profile for adidas,” the bank said.
“It is important to look at the underlying attractiveness of the sporting goods industry, a broader consumer recovery and the current style trends favouring adidas.”
"[Not] all of these competitive factors will last forever,” the bank added, “but we see them aiding adidas over the next two to three years”.