FRANKFURT (dpa-AFX) - A reversal in Bank of America's (BofA) assessment of Adidas dealt a heavy blow to the sportswear manufacturer's shares on Tuesday. In an otherwise flat overall market, the stock slumped 7.0 percent to €158.00 by midday, making it the worst performer in the DAX benchmark index.

The gains made by the stock since its 29-month low of €150.40 in November have largely evaporated. Up until now, hopes for the upcoming 2026 FIFA World Cup had likely contributed to the share price's momentum. However, in his European industry outlook for 2026, analyst Thierry Cota expressed skepticism and considers the anticipated upswing to be an illusion.

He slashed the price target for Adidas shares from €213 to €160 and downgraded his investment rating by two notches, from "Buy" to "Underperform," now viewing the stock as one of the least attractive in his coverage universe.

According to Cota, there are no signs of a turnaround for the sportswear industry. Although the downturn that began in the second quarter of 2023 should technically be over, there are no indications that the phase of weak sales (excluding acquisitions, divestitures, and currency effects) is ending. On the contrary, the slump is likely to enter its fourth year, leading Cota to conclude: "The 20-year leisure-sportswear trend is over."

In the short term, the US investment bank analyst writes that the industry is expected to see a 2 percent decline in sales in the fourth quarter, mainly due to Nike and Puma, "and a turning point is not in sight." Overall, the sector's business will at best grow slowly, but there will be no return to long-term average growth in the high nine percent range. The market has already responded, as consensus estimates for earnings per share across the sector for 2026 and 2027 have, on average, dropped by about 20 percent since early 2025.

Regarding Adidas, he wrote that the upturn is gradually fading and that several hurdles now loom. Cota pointed to only minimal expected revenue growth in the fourth quarter and a likely slowdown after the summer's FIFA World Cup. Weak industry trends are also limiting margin prospects.

In addition to Adidas, the analyst also downgraded JD Sports, from "Buy" to "Neutral." Regarding the British retailer, he sees a shift in problems from industry-wide to company-specific issues. Given slow growth, a retail company with high and rising fixed costs, such as JD Sports, has only limited sales and margin potential. Cota thus expects consensus EPS estimates to continue falling and cut his price target from 112 to 96 pence.

For Puma, he maintained his neutral investment rating and, among other reasons due to lower capital costs (WACC), raised his price target by 2 to €24. Most recently, this stock fell 3.0 percent to €21.77 in the MDAX. Meanwhile, JD Sports lost 5.4 percent in London, falling to 82.66 pence./ck/lew/jha/