With the European Football Championships and the Olympics this summer, sporting goods companies will once again have the big stage. Some people are hoping for strong share price gains from Nike, Adidas, Puma & Co, as well as companies such as Under Armour and Lululemon. However, most of them are having a hard time at the moment.
4. April 2024. FRANKFURT (Börse Frankfurt). 2024 is a sporting year - with the European Football Championships starting on June 14 in Germany and the Olympics starting on July 26 in Paris. Some people are also hoping that shares in sporting goods manufacturers will be caught up in soccer and sports fever. After all, the games provide the perfect stage for the products of Adidas, Nike and Co.
However, shares in sporting goods manufacturers have not done really well recently. Nike and Puma have suffered heavy losses since the beginning of the year. Only Adidas shares are still doing quite well since former Puma CEO Bjørn Gulden took the helm at the beginning of 2023. "The industry is heavily dependent on the economy and consumption," explains Marc Richter, who trades foreign stocks at Baader Bank. "And both economic and consumer indices are at all-time lows."
Nike: "Strong pipeline" because of the Olympics?
Nike shares, which are traded on Oddo BHF, have lost over 40 percent of their value on the Frankfurt Stock Exchange since their high at the end of 2021 and are currently trading at 83 euros. The trigger for the recent price slide: a gloomy outlook. Revenue would fall by a low single-digit percentage in the first half of the 2024/25 financial year, it was reported in March.
Analysts from Goldman Sachs, JP Morgan, UBS and Bernstein Research subsequently lowered their price targets for Nike, but still recommend buying. According to Bernstein, a lack of innovation has been the biggest problem so far. Now the turnaround seems to have come with a strong pipeline for 2024, partly due to the Olympics. UBS also sees the first signs of progress. Canada's RBC, on the other hand, downgraded Nike from "Outperform" to "Sector Perform", with a price target lowered from 110 to 100 US dollars (current price 90.33 US dollars). Organizational restructuring and the conversion of products caused further uncertainty and risks to the forecasts. The outlook for Adidas is currently better.
"Under Armour boss underestimated"
The US sporting goods manufacturer Under Armour is not quite as well-known as Nike and Adidas - at least in Europe. "Under Armour's target group is primarily young customers, the buyers of tomorrow," says Baader Bank trader Richter. However, Under Armour (US9043111072) is not doing well either. In mid-March, the company announced that former CEO and founder Kevin Plank would be replacing current CEO Stephanie Linnartz - after just over a year. Linnartz had wanted to realign the brand with more sports fashion for women and shoes. None of this went down well on the stock exchange: The share is currently trading at just 6.40 euros on the Frankfurt Stock Exchange, down from just under 8 euros at the beginning of the year. According to UBS, however, Plank is underestimated. The bank therefore continues to recommend buying the share with a target price of 12 US dollars, further above the current price in US dollars of 6.70.
Lulumon: more than just yoga clothing
Lululemon (US5500211090) is primarily known to yoga fans. "However, Lululemon now offers clothing for all popular sports," explains Richter. For a long time, the share price went almost exclusively upwards. Recently, however, Lululemon also disappointed with a weak outlook. The sales forecasts for the first quarter and the year as a whole were lower than expected. Lululemon is now trading at EUR 345 on the Frankfurt Stock Exchange, down from EUR 470 at the end of 2023. According to UBS, it is unclear whether this is a blip or the start of a longer downward trend. The bank lowered its price target from 525 to 475 US dollars (currently 374 US dollars) and confirmed its neutral rating.
Soccer fever = FIFA fever?
Instead of sportswear and equipment, the Californian company Electronic Arts (US2855121099) offers computer and video games. After a steep rise, the share has been moving sideways for several years. Electronic Arts shares, which are traded at Baader Bank, currently stand at EUR 122, roughly the same level as at the start of the year. Incidentally, the company became famous for its sports games such as FIFA and Madden NFL - and could therefore also benefit from soccer fever according to some analysts.
by: Anna-Maria Borse © 4. April, 2024, Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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