--- title: "UBS Downgrades Adidas on Rising Margin Pressures, Shares Dip" type: "News" locale: "en" url: "https://longbridge.com/en/news/294799366.md" description: "UBS downgraded Adidas from Buy to Neutral, lowering its price target to €173 due to rising margin pressures. Analysts cite peaking profit margins in key markets, higher production costs from oil prices, and the expiration of favorable currency hedges as headwinds through 2028. Despite optimism on long-term revenue growth under CEO Bjørn Gulden, UBS warns that cost efficiencies may not offset these challenges, limiting earnings upgrades. Following the downgrade, Adidas shares fell approximately 3%." datetime: "2026-08-04T09:39:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294799366.md) - [en](https://longbridge.com/en/news/294799366.md) - [zh-HK](https://longbridge.com/zh-HK/news/294799366.md) generator: "portal-rs" --- # UBS Downgrades Adidas on Rising Margin Pressures, Shares Dip Shares of **Adidas** took a hit early Thursday after UBS slapped a downgrade on the sportswear heavyweight, shifting the rating from Buy to Neutral. The Swiss bank also chopped the price target down to €173 from €219, flagging several emerging headwinds that could weigh on the company's margins through 2027 and 2028. UBS analysts Robert Krankowski and Zuzanna Pusz remain optimistic about Adidas' long-term growth under CEO Bjørn Gulden, forecasting solid high-single-digit revenue gains over the medium term. But the kicker comes in their outlook on profitability. They argue that the gross margin tailwind supporting the company's earnings has lost steam, and cost efficiencies alone might not make up the gap moving forward. The report points to three critical pressures squeezing Adidas' margin profile. First, its profit margin in key markets is close to peaking - leaving limited room for improvement as Adidas pivots towards a more balanced portfolio that mixes performance and lifestyle goods, with an anticipated boost in wholesale activity in 2027. Second, rising oil prices are hiking production expenses. Over 60% of Adidas' raw materials are linked to petroleum derivatives, so recent energy price climbs are feeding into product costs. UBS expects that the company's ability to pass these hikes through pricing will only partially offset the blow, unlike earlier inflation cycles. Currency dynamics add another wrinkle. The strength of the U.S. dollar has been a tailwind for margins, but foreign exchange hedges due to expire next year mean this support is unlikely to last into 2028, potentially flipping to a headwind. UBS's discounted cash flow analysis suggests that the current market price is optimistic in assuming Adidas will maintain those high-single-digit revenue trends alongside a terminal margin exceeding 10%. The bank warns that with these margin challenges and no obvious catalysts ahead, earnings upgrades may be limited and the shares could stay stuck in a trading range. Competitive pressure looms too, with Nike and Puma flagged as potential obstacles to Adidas' growth path post-2027. Although historically the correlation between Adidas and Nike's sales growth hasn't been tight, UBS believes the rivalry could ramp up, adding another layer of complexity to the profit outlook. Following the downgrade, Adidas shares fell around 3% by mid-morning European trading. With these fresh concerns on margins and competition, the sportswear giant's near-term trajectory has become a bit more uncertain. ### Related Stocks - [ADDYY.US](https://longbridge.com/en/quote/ADDYY.US.md) - [ADS.DE](https://longbridge.com/en/quote/ADS.DE.md) - [UBS.US](https://longbridge.com/en/quote/UBS.US.md) - [NKE.US](https://longbridge.com/en/quote/NKE.US.md) - [PUM.DE](https://longbridge.com/en/quote/PUM.DE.md) ## Related News & Research - [Spin Master’s Toca Boca partners with adidas for in-app collaboration in Toca Boca World](https://longbridge.com/en/news/296491486.md) - [Adidas Lifts Sales Target, Names New Finance Chief](https://longbridge.com/en/news/294313691.md) - [Adidas raises 2026 sales outlook](https://longbridge.com/en/news/294306643.md) - [Adidas names Birgit Kretschmer CFO, succeeding Harm Ohlmeyer](https://longbridge.com/en/news/294305289.md) - [The World Cup winners wore Adidas shirts. But the company's investors are still crying foul.](https://longbridge.com/en/news/294335984.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**