ADDDF - Adidas cut to Hold ahead of expected earnings disappointment

Adidas ( OTCQX:ADDYY ) stock lost ground on Thursday after Baird removed its bull rating.

Equity analyst Jonathan R. Komp explained that inventory issues and persistent headwinds in China still loom large over the stock. Further, a shift in leadership likely sets up 2023 as a “reset year” for the stock.

“We were wrong to upgrade shares ~10 months ago ahead of multiple unforeseen challenges, and while we have not connected with the company since early December, we are taking advantage of recent improved sentiment spurred by optimism about new leadership and China reopening benefits to reduce our exposure,” he wrote. “We anticipate potentially disappointing initial 2023E guidance, and are stepping to the sideline until earnings revision risk subsides while still retaining a positive longer-term bias given substantial long-term recovery potential.”

He assigned the stock a €145 price target alongside the downgrade to Neutral from Outperform. Frankfurt-listed shares of the apparel and footwear manufacturer fell 3.29% on Thursday.

Read more on Nike’s forecasts for growth in China .

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