ADIDAS - NEUTRAL vs. BUY | EUR235 VS. EUR305 (+38%) Second PW in a row as China is now adidas’ biggest thorn in its side Yesterday evening, adidas issued a second PW due to a softer recovery in China, and its anticipation of a potential slowdown in other markets that would cause a double whammy: 1/ softer top-line growth and 2/ aggravating the risk of excess inventory. As such, even if the lowered EBIT margin target implies a ~25% downside risk to CS expectations, we believe that risks surrounding excess inventory are not totally factored in. Hence our rating downgrade to Neutral whilst our new TP of EUR235 results from new FY22-23 expectations (-19% on avg.) and revised WACC assumptions.