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Asset Watch
Thursday, January 9, 2025
With U.S. stocks wobbling on Jan. 7, hawkish economic data and rising Treasury yields once again took the wind out of the bulls’ sails. However, while volatility may be amplified in the days ahead, healthy GDP growth and consumer spending should help support stocks, especially in Europe.
Could Adidas be a game-winner in 2025?
On Jan. 6 Bernstein analysts said, “Adidas is poised for a multi-year winning streak,” upping their price target to €300.
The group cited channel checks, consumer surveys, and real-time pricing data, which suggest 70% earnings per share (EPS) growth over the next two years. Moreover, lifestyle footwear and apparel are projected to lead the charge, as “Terrace (i.e. Samba, Gazelle) has been a 2024 success story that continues to see strong momentum into 2025.”
They added, “Putting the stock in line with [its] pre-COVID valuation [of 25x earnings] gives us 29% upside.”
On top of Adidas’ robust fundamentals, its weekly chart looks terrific. The stock has confirmed a breakout above €232 and is on pace for six consecutive weekly closes above the key level. Consequently, €232 should act as support en route to new highs.
Another bullish development is how Adidas continues to make higher lows. The upward-sloping white line (labelled trendline support) highlights how a textbook uptrend remains in place.
The 10-week moving average (the blue line) was also a meaningful trend indicator during the 2022 bear market. If you analyse the left side of the chart, you can see that it acted as resistance most of the way down.
Entering a position now could be wise for aggressive traders with higher tolerances for volatility. With interest rate uncertainty capping momentum, daily fits and starts could occur in January and may lead to a pullback.
As a more cautious approach, waiting for Adidas to retest and hold €232 again could provide a nice entry point if a market-wide correction arrives.
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