Puma shares climbed roughly 7% on Thursday after Citigroup elevated the German sportswear company to a Buy rating from Neutral, attributing the move to a sizeable growth opportunity in China associated with Anta Sports' planned acquisition of a 29% stake in the business. Alongside the rating change, Citi raised its price target on the stock to €35 from €27.50.
Citi's team, led by Monique Pollard, quantified the potential China uplift, forecasting a 36% constant-currency compound annual growth rate (CAGR) in Puma's China revenues between 2026 and 2028. The bank based part of its outlook on like-for-like precedent, noting that Amer Sports delivered approximately an 18% like-for-like growth rate in China in the three years after Anta's acquisition of that business.
Those projections feed into Citi's broader regional revenue view: the bank's fiscal 2028 (FY28) estimate for Asia-Pacific revenue now sits 32% above consensus. Under Citi's base case, China would expand its share of group revenue from roughly 7% today to about 11% by 2028, reflecting a materially larger contribution from the market over the medium term.
The bank also sees room for gross margin improvement. Citi expects gross margin to rise by 240 basis points this year to 47.3%, ahead of the 46.7% consensus estimate. The margin upside is driven by a combination of favorable foreign exchange movements, a higher mix of direct-to-consumer (DTC) sales which typically carry stronger margins, and the planned release of inventory reserves that were built up during a difficult 2025.
"Higher DTC mix and growth in China sales are the key drivers of margin expansion over the mid-term," the analysts wrote.
On profitability, Citi anticipates Puma will return to profitable growth in 2027, which aligns with the company's guidance. The bank's estimate for Puma's EBIT in 2027 stands about 12% above consensus, with the divergence widening to roughly 36% for 2028 as the firm expects accelerating China momentum to flow through the P&L more fully.
Despite the upbeat medium-term case, Citi highlighted several near-term risks that could temper performance. The analysts forecast a 240-basis-point drag on gross margin in 2027 tied to rising polyester costs, themselves linked to higher oil prices. They also flagged the potential for freight cost increases if geopolitical tensions in the Middle East intensify, a factor that touches the logistics and supply chain components of Puma's cost base.
Operationally, Citi described momentum in Puma's Lifestyle segment as "lackluster," noting that franchises such as the Speedcat have not yet resonated at the scale achieved by rivals' legacy lines like Adidas's Samba. That shortfall in consumer traction forms another area of uncertainty even as the China opportunity gains traction.
In aggregate, Citi's conviction rests on China-led revenue acceleration and a higher-margin sales mix that together support an upgraded outlook for Puma. But the bank's note makes clear that commodity cost swings, freight exposure and uneven product momentum are meaningful near-term variables that could influence the trajectory.
Sectors affected: Retail apparel and footwear, supply chain and logistics, and commodities exposure related to polyester feedstocks.