Barclays initiated shares of Adidas (OTC:ADDYY) with an Overweight rating and €218 price target in a note to clients Friday.
The bank's analysts said that for Adidas and Puma, they expect the operating environment to remain challenging in the first half of the year as consumers remain cautious and selective in their athleisure spending.
However, they see brands with strong product pipelines still being able to grow by taking market share.
"We think the progress Adidas has made in 2023 is encouraging and sets the company up for acceleration in a more eventful 2024, which will have the benefit of major sporting events," said the firm.
"We think the business update on 31 January shows that business turnaround has been on the right track, and we view the very conservative guidance for 2024 as the worst-case scenario, which is consistent with CEO Bjorn Gulden's 'beat and raise' track record," they added.
With Adidas management having so far kept expectations low for 2024, Barclays thinks the surprise could be on the upside given its strong product momentum in both lifestyle and performance and the incremental sales and profit opportunity that comes with the 'pull model' in China as the company gradually takes back market share.