Adidas Q3 preview - due pre-market on 8 November We expect Adidas to report similar trends in Q3 as in the prior quarter despite investor nervousness about market conditions in the sporting goods industry. We factor in a slightly higher profit contribution from the sale of Yeezy products and from supply chain benefits beginning to flow through gross margins. We look for reported Q3 EBIT of EUR 265m. Q3 expectations - should continue to show good progress As set out inside, we think Adidas will continue to show good progress at the early stages of its turnaround. We expect Q3 constant currency sales to be flattish year-on-year, like the prior quarter, helped by estimated Yeezy sales of EUR 350m. Profits will remain distorted by one-off costs and Yeezy profits. We show a Q2 profit bridge inside and look for a statutory/reported EBIT of EUR 265m. Full Year 2023 - underlying and reported profit guidance look conservative We continue to think that management''s full year sales guidance (for a mid-single-digit decline) is conservative. Management''s FY underlying EBIT guidance of ''around the break-even level'' also looks conservative to us: we model EUR 211m. This excludes the guided effects of Yeezy write-downs (up to EUR -400m) and strategic change costs (up to EUR -200m). Given that some Yeezy inventory has been sold in Q3 (we estimate EUR 125m of stock), we model a more limited write-down of EUR 275m in Q4. As a result our Adj EPS forecast rises from EUR 0.92 to EUR 1.33. Raising our estimates and reiterate Outperform EPS is rather meaningless for 2023 but we raise our underlying EBIT forecast (prior to Yeezy profits, exceptional restructuring and inventory write-down costs) from EUR 168m to EUR 211m, ahead of management''s break-even guidance. Our target price remains at EUR 210, which is based on a DCF valuation with c.13% long term margins. We estimate that the shares are only pricing in single-digit margins in the long-term, and maintain our...