Adidas plunges after weak earnings report: analysts cut its price
Adidas plunged in the stock market on Friday. The German clothing and sports footwear company recorded heavy losses (-10.88%) after anticipating a drop in turnover. low earnings forecast for 2023which led to numerous reductions in valuation by several firms.
This is the case of experts from Bank Sabadellwho reduced their board of directors to ” sell and have set their target price in the study for a discount.
“The most relevant were its indications for 2023, which reflect the negative impact of the impossibility of selling the stock of… Kayne West and which point to single-digit declines in comparable sales and an impact of 500 million euros on EBIT”, they explain.
In addition, Adidas also anticipated extraordinary impacts of 200 million euros “related to the strategic review they are carrying out”, which could “generate a loss of 1.5 million euros”. 700 million euros“.
“These advertisements highlight the challenges faced by Adidasnot only because of the termination of the Kayne West deal (and the potential impact on 2023), but also because of the deal’s impact on the labor market. an extraordinary evolution of the company.where they say they need to take action to connect with the consumer to drive profitable growth again,” they say.
OTHER ASSESSMENT REDUCTIONS
For their part, experts from RBC reiterated their advice to maintain the title, but lowered their target price to 110 euros per share against 130 euros previously.
“We expected extraordinary impacts under the new CEO, Bjorn Gulden. What took us by surprise was the lower underlying guidance, which translates into lower EBITDA. financial outlook for fiscal year 2023 noticeably worse than expected“, explain these analysts.
“There is a lot of work to be done on corporate culture, product, declining direct sales rate, excess inventory and digesting the company exit. Yeezyall of this can be done, but it will take time,” they conclude. Their analysis led them to reduce by “significantly” their estimates and its cash flow forecast, justifying its lower valuation of 110 euros.
Other experts who reduced their prices were those of JP Morgan. In the case of the American bank, they revised its valuation downwards to 100 euros per share of 105 euros and reiterated their advice to neutral.
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