RBC Capital Markets upgraded Adidas AG to "outperform" from "sector perform" on Wednesday and increased its price target to €210 from €170. The broker’s move follows a reassessment of Adidas’ earnings trajectory and margin outlook for FY2027, with the stock currently trading at about 13 times FY27 estimated price-to-earnings.
Despite the valuation, RBC says Adidas is trading at a 13% discount to Western Sporting Goods peers while carrying the highest three-year earnings-per-share growth forecast across the firm’s coverage universe. The firm projects a three-year EPS compound annual growth rate of 25%, compared with a coverage average of 11%.
RBC noted that Adidas’ price-to-earnings growth ratio of 0.6 times ranks among the lowest across the broker’s luxury and sporting goods coverage. "adidas’ strong execution is not getting the recognition it deserves," the report states.
The broker’s FY2026 estimates show revenue of €26.63 billion, which aligns with company guidance for high-single-digit organic growth, and adjusted EBIT of €2.45 billion, representing a 9.2% margin. That EBIT projection sits above the company’s own guidance of €2.30 billion for FY2026.
RBC highlighted recent top-line momentum: first-quarter 2026 organic revenue rose 14%, composed of 10% underlying growth plus a 4-percentage-point contribution from the World Cup. The broker is forecasting a comparable 13% organic growth rate for the second quarter.
For FY2027, RBC lifted its revenue estimate by 1% to €28.75 billion and increased its EPS forecast by 5% to €12.42. Those FY27 estimates sit approximately 1% and 4% ahead of consensus on revenues and EPS respectively, according to the broker’s calculations.
Gross margin is expected to benefit in FY2027, with RBC forecasting a 90 basis-point expansion to 52.3%. The firm attributes the improvement mainly to €/$ foreign exchange hedging tailwinds totaling 160 basis points, partially offset by headwinds from sourcing and logistics costs estimated at negative 50 basis points.
Adidas’ own guidance calls for roughly 10% EBIT margins in FY2027 and greater than 10% in FY2028. RBC’s margin estimates are 10.4% for FY2027 and 10.8% for FY2028.
The broker also referenced Adidas’ recent record of exceeding its March guidance each year since FY2023. Specific outcomes cited include delivering near-breakeven EBIT of €201 million in FY2023, producing €1.34 billion against guidance around €500 million for FY2024, and delivering €2.06 billion versus guidance of €1.70 billion to €1.80 billion for FY2025.
On market share, RBC’s report cites Euromonitor data showing Adidas regained 80 basis points in global Sports Footwear and 10 basis points in Sports Apparel between 2024 and 2025, taking shares to 11.2% and 5.9% respectively. These levels remain below earlier peaks of 12.9% in footwear and 7.2% in apparel.
RBC’s DCF-derived price target rests on a weighted average cost of capital of 8.5%, a terminal growth rate of 2.5% and a risk-free rate of 3.5%.
Analytical context
The upgrade and higher price target reflect RBC’s view that Adidas can sustain above-average EPS growth and improve margins into FY2027, aided by FX hedging benefits and a recovery in market share. The broker’s estimates are positioned modestly above consensus for FY27 revenue and EPS, supporting a more constructive stance on the stock.