Q1 20% ahead of consensus Adidas beat Q1 consensus EBIT expectations by 20% and its guidance for both Q2 and the full year were more bullish than the market had expected. With the overhang from China political tensions seemingly sufficiently reflected in guidance, inventories clean and momentum in product ranges, we think the bull case is even clearer now. We reiterate our Outperform rating. Outlook for Q2 better than feared Management''s guidance for Q2 revenue growth of c.+50%, was more bullish than consensus (+38%). We had cut our Q2 forecast from +50% to +42% on the back of the China political tensions but move these back up following today''s reassuring message. On the call the company did not provide guidance for China in Q2 but noted that there had been a ''slow but steady'' improvement in traffic and that its brand communication had increased since mid-April. 2021 sales guidance upgraded Coming into the results, investors were worried that management might lower guidance on the back of China issues. Management reiterated its full year net income guidance (EUR 1.25bn - 1.45bn) with the bottom end of the range looking increasingly unlikely. It raised full year cFX sales guidance to ''high teens'' from ''mid/high teens'', but held back from raising profit guidance as it assesses the impact of external supply chain challenges and plans to increase marketing spend. Forecasts unchanged with H2 upside risk We leave our net income forecasts for the year largely unchanged, hence reflect more conservative profit forecasts in H2. The bear case has been predicated on weak brand momentum and high inventories and, more recently, the situation in China. We think the combination of an improving product pipeline, structural tail winds and attractive valuation should drive a re-rating. We maintain our Outperform rating and recently rated it as an ESG Leader.