* We are downgrading our rating to Underperform with a new €80 target price (vs €70) following the recent share rally (3m +35%) for three reasons:
(1) Even with a c5% EPS upgrade to 2015 and 2016 forecasts, on 23x 2016 PER valuations look stretched given modest M-T growth,
(2) In the face of adverse FX movements there is little clarity as to how Adidas will achieve flat margin guidance in 2016,
(3) We believe it is increasingly likely that the replacement for CEO Herbert Hainer will be an internal appointment,
and the perception of a near-term change in strategy and execution is much reduced.