Adidas: A Buy Despite Tariff Headwinds and Revised Price Targets

Adidas's 2025 performance has defied the headwinds of U.S. tariffs and global economic uncertainty, positioning the brand as a compelling long-term investment. Despite a projected $231 million cost burden from tariffs on goods from Vietnam and Indonesia—its two largest sourcing hubs—the company has demonstrated resilience through strategic pricing, operational efficiency, and robust demand in key marketsAdidas Tariff Impact Analysis^[4]. This analysis argues that Adidas's strong market positioning, operating leverage, and proactive mitigation strategies justify a “Buy” rating, even as analysts revise price targets to account for near-term risks.

Strategic Market Positioning: Double-Digit Growth in Key Regions

Adidas has leveraged its brand equity and digital transformation to outperform peers in critical markets. In Q1 2025, the company reported a 13% currency-neutral sales increase, driven by double-digit growth in North America (13%), Greater China (12%), and Latin America (15%)Adidas Q1 2025 Presentation^[2]. These regions now account for over 40% of Adidas's global revenue, with the U.S. market alone contributing 20% of total salesAdidas Supply Chain Strategy^[5]. The brand's focus on innovation—such as its Ultraboost and Yeezy lines—has sustained consumer demand, while its direct-to-consumer (DTC) strategy has boosted margins.

Emerging markets, in particular, have become a growth engine. Adidas's expansion into Southeast Asia and Africa, coupled with localized product offerings, has enabled it to capture market share from regional competitors. According to a report by Bloomberg, the company's operating profit surged 82% to €610 million in Q1 2025, underscoring its ability to convert top-line growth into profitabilityAdidas Q1 2025 Presentation^[2].

Operating Leverage: Efficiency-Driven Profitability

Adidas's operating leverage is a cornerstone of its competitive advantage. The company has managed to grow operating profit at a faster rate than sales by controlling overhead costs. Operating expenses in 2025 are projected to rise at a slower pace than revenue, a trend attributed to streamlined supply chains and automation in manufacturingAdidas Annual Report 2024 Outlook^[1]. For instance, Adidas's shift to nearshoring—relocating production closer to key markets—has reduced logistics costs and improved responsiveness to demand fluctuationsAdidas Supply Chain Strategy^[5].

The brand's financial discipline is further reflected in its 2025 guidance: operating profit is expected to reach €1.7–1.8 billion, up from €1.2 billion in 2024Adidas Annual Report 2024 Outlook^[1]. This growth is underpinned by a high-single-digit sales increase and a 200-basis-point improvement in gross margins, driven by cost optimization and premium pricing strategiesBaader Helvea Adidas Rating Reaffirmation^[3].

Tariff Mitigation: Pricing and Supply Chain Agility

While U.S. tariffs pose a significant challenge, Adidas has adopted a multi-pronged approach to mitigate their impact. The company plans to absorb part of the cost burden but has signaled potential price increases for new products in the American marketAdidas Tariff Impact Analysis^[4]. CEO Bjorn Gulden emphasized that pricing adjustments will be “targeted” to avoid alienating consumers, with existing product lines kept stable to maintain brand loyaltyBaader Helvea Adidas Rating Reaffirmation^[3].

Beyond pricing, Adidas is diversifying its supply chain. The brand is investing in nearshoring initiatives, such as expanding production in Mexico and Vietnam, to reduce reliance on high-tariff regionsAdidas Supply Chain Strategy^[5]. Additionally, digital forecasting tools and agile logistics networks are enabling faster inventory turnover, minimizing the risk of overstocking in volatile marketsAdidas Supply Chain Strategy^[5].

Analyst Price Targets: Optimism Amid Uncertainty

Despite the tariff-related risks, analysts remain cautiously optimistic. As of September 2025, nine Wall Street analysts have assigned a “Buy” rating to Adidas, with three upgrading their outlook in the past quarterAdidas Analyst Ratings and Price Targets^[6]. Baader Helvea, for example, reaffirmed a €238 price target, citing Adidas's strong Q1 performance and long-term growth potentialBaader Helvea Adidas Rating Reaffirmation^[3]. Meanwhile, Morgan Stanley upgraded its rating from “Underweight” to “Overweight,” reflecting confidence in the brand's ability to navigate trade pressuresAdidas Analyst Ratings and Price Targets^[6].

The mean price target for Adidas stock now stands at €256, a 12% premium to its current price. This premium accounts for the company's projected operating leverage, market share gains in Asia, and resilience in the U.S. despite inflationary pressuresAdidas Analyst Ratings and Price Targets^[6].

Conclusion: A Buy for Long-Term Investors

Adidas's strategic agility and operating leverage make it a compelling investment despite near-term tariff challenges. The company's ability to balance cost management with innovation, coupled with its strong performance in high-growth regions, positions it to outperform peers in the athletic apparel sector. While U.S. price increases and supply chain adjustments introduce short-term volatility, Adidas's long-term fundamentals—backed by analyst upgrades and revised price targets—justify a “Buy” rating for investors with a 12–18 month horizon.