Bank of America cuts Adidas to rare sell on slowing growth outlook

Adidas shares fell as much as 7.6 percent on Tuesday after Bank of America issued a rare sell rating on the German sportswear giant, warning that growth is set to slow and competition is intensifying. The abrupt double downgrade – from buy to underperform – stands out in a sea of optimism. About 84 percent of analysts tracked by Bloomberg still rate Adidas a buy or equivalent, even as the stock lost almost 30 percent of its value in 2025 due to currency headwinds.

Growth expected to moderate post-World Cup

Bank of America analysts led by Thierry Cota predict Adidas will return to single-digit sales growth in 2026, a sharp deceleration from recent years. While the bank expects the 2026 FIFA World Cup to deliver a temporary boost, they warned that momentum will likely fade afterward.

“The question is what comes after the World Cup boost,” the analysts wrote. “We expect sporting goods names with sustained and strong growth, like On and Asics, to be more in focus in a sector where investor interest is waning.”

The bank slashed its price target to €160, the lowest among analysts and implying a roughly 6 percent drop from Monday’s close. Adidas traded at €158.60 as of 11:08 am in Frankfurt.

Competition from On, Asics poses threat

Bank of America highlighted several competitive threats facing Adidas. On, the Swiss running brand, and Asics, the Japanese performance footwear maker, are gaining market share with strong double-digit growth rates. Puma, Adidas’s German rival, is also positioned to attract more investor attention.

Perhaps most significantly, Nike’s turnaround efforts under returning CEO Elliott Hill could pressure Adidas’s market position. Nike has been restructuring its product lineup, cutting SKUs (stock keeping units), and refocusing on performance categories – moves that could reignite growth in 2026 and beyond.

For context, Nike reported revenue of $12.4bn (€11.9bn) in its fiscal second quarter ended Nov. 30, down 8 percent year-over-year, but has signaled confidence in its restructuring plan. Adidas, meanwhile, generated €6.63 billion in the third quarter of 2025, up 7 percent on a currency-neutral basis.

Casualization trend reaching saturation

Bank of America also downgraded JD Sports Fashion and warned that the 20-year “casualization trend” – the shift toward wearing athletic footwear and apparel in everyday settings rather than just for sports – is largely complete. This trend has been a major growth driver for the sporting goods industry, blurring the lines between performance and lifestyle categories. 

The analysts’ view suggests that brands can no longer rely on expanding the athleisure market to drive growth. Instead, they must compete more directly for share within a maturing category, favoring brands with genuine performance innovation or strong brand momentum.

Financial implications for investors

The sell rating challenges the prevailing Wall Street consensus. Bank of America’s €160 price target implies that Adidas shares could fall further from current levels, despite already losing nearly a third of their value in 2025.

For investors, the downgrade highlights several risks: slowing organic growth rates, currency volatility (particularly euro weakness), and the potential for Nike’s comeback to steal share. The analysts suggest that capital may rotate toward faster-growing competitors like On and Asics, which have sustained momentum and aren’t facing the same competitive pressures.

The downgrade also raises questions about valuation. While Adidas trades at a discount to historical multiples following last year’s decline, Bank of America argues that’s justified given the growth outlook and competitive dynamics.

What this means for the sporting goods industry

The downgrade signals a potential inflection point for the sporting goods sector. After years of elevated growth driven by the pandemic fitness boom and the casualization trend, the industry may be entering a more mature phase characterized by slower growth and intensified competition.

Brands with clear performance differentiation – like On’s CloudTec cushioning technology or Asics’s gel systems – appear better positioned than those relying primarily on brand heritage or lifestyle positioning. The World Cup will provide a temporary boost for brands with strong football (soccer) credentials, but sustained success will require consistent product innovation and marketing execution.

For retailers and industry stakeholders, the message is clear: the rising tide that lifted all boats over the past two decades is receding. Winners will need to differentiate through product innovation, operational excellence, and brand building rather than simply riding category growth.