Kicking around the investment case Back in July we upgraded Adidas to outperform (ADIDAS, INDITEX: From Z to A) and downgraded Nike to underperform (NIKE B: Hair Jordan). Since then, we have debated our investment theses with investors, and the shares have fallen in recent days as concerns about the 2024 outlook increase. This report discusses the pushbacks to our Adidas investment case. We discuss the pushbacks to our Nike call in More Hair to the Story. Sales - pushback is that building brand-heat is only in selective product areas The pushback we get is that Adidas'' momentum is concentrated in a few sneaker styles. We don''t really disagree with this one: but it''s a great platform to build on, and our analysis of social media, app usage and search trends shows encouraging signs for Adidas brand heat compared with peers. Margins - pushback is that Adidas'' profit margin rebuild and potential is less than hoped for The pushbacks we get are that margin progress in 2024 may be slow and that medium-term potential is limited due to structural factors (Yeezy and China). We remain bullish: our 2024 margin bridge puts us 17% ahead of consensus EBIT, and we think double-digit margins are achievable by 2026. Valuation - pushback is that it''s too late to invest in Adidas The pushback we get is that the shares have already moved sharply and that it is too late to invest in Adidas. Yet the sell-side still favours Puma and we think there is valuation upside. The stock trades on a historical average EV/Sales multiple and we estimate is only pricing in c.11% long term margins. Conclusion: a top pick for 2024 We think Adidas should be considered one of the biggest brand revitalisation stories for 2024. There''s more brand work and inventory clean-up required, but we can already see progress. Industry dynamics look more favourable in 2024: normalised supply chains and inventories, important sporting events, and opportunities in China. We think there is more to...