Top Apparel Stocks to Watch, According to Bernstein

Bernstein has released updated ratings and price targets for leading U.S. apparel and specialty retail stocks, highlighting opportunities across athletic footwear and sportswear as brands navigate shifting consumer preferences and competitive dynamics.

The firm identifies growth potential in brands expanding market share through product innovation, wholesale distribution improvements, and geographic expansion, while flagging headwinds for others facing increased competition and product challenges.

1. Adidas (ADS.GR / ADDYY)

Rating: Outperform | Price target: €245 (ADS.GR) / $132.50 (ADDYY)

Adidas is expected to gain U.S. market share from a relatively low base, helped by continued Lifestyle momentum, a stronger Running offering and improved wholesale distribution. Its Terrace and other casual-footwear initiatives, along with World Cup-related apparel, position the brand to benefit from casualization. Bernstein forecasts 7% U.S. sales CAGR through 2030, with market share rising from 3.5% to 4.3%.

In recent news, Adidas AG reported record quarterly sales for the second quarter of 2026 but missed earnings per share estimates. The company also received an upgrade to Outperform from RBC Capital, citing direct-to-consumer led revenue growth.

2. Nike (NKE)

Rating: Outperform | Price target: $68

Bernstein expects Nike’s recovery to be supported by improved product innovation and renewed wholesale distribution. Wholesale should outperform DTC as Nike expands with Sporting Goods, Outdoor and Running Specialty retailers. The firm forecasts U.S. GMV growth of 3%-4% CAGR through 2030, broadly in line with the market. The upside case also includes a potential revival in the Jordan brand if Nike’s 2027-28 innovation pipeline restores brand heat.

JPMorgan downgraded Nike to Underweight, citing concerns over the financial impact of strategic decisions. Separately, the company announced the resignation of its Chief Accounting Officer, effective September 4, 2026.

3. On Holding (ONON)

Rating: Outperform | Price target: $62

On has the longest growth runway among the major brands covered, given its lower penetration and brand awareness, continued store expansion and opportunities to scale geographically and across categories. Bernstein forecasts 12% sales CAGR through 2030, taking its U.S. market share from 1.5% to 2.3%. Global sales are expected to grow at a high-teens to low-20% rate, particularly as China and Asia expand.

On Holding is reducing its wholesale channel sell-in for the second and third quarters of 2026 to manage inventory amid a market slowdown. Following the company’s second-quarter results, firms including UBS and Telsey lowered their price targets.

4. Deckers Outdoor (DECK)

Rating: Market-Perform | Price target: $105

Deckers has meaningful upside potential from a recovery in Hoka’s U.S. demand, particularly if the brand can take pricing to offset tariff pressure. Bernstein also sees upside if Ugg continues growing above the broader casual-footwear market while maintaining strong full-price sell-through. However, Bernstein remains cautious because Hoka and Ugg face innovation and competitive risks, while cost inflation and other expenses could pressure margins.

Deckers Outdoor reported first-quarter revenue of $1,020 million, beating consensus estimates, but provided a softer-than-expected outlook for the second quarter. In response to the guidance, both Stifel and Truist Securities lowered their price targets on the company.

5. Lululemon (LULU)

Rating: Market-Perform | Price target: $145

Lululemon is expected to continue losing U.S. market share as product challenges and rising competition outweigh the structural growth of the sportswear market. Bernstein expects U.S. sales to remain broadly flat through 2030, with market share declining from 3.3% to 2.8%. The firm points to growing competition from premium brands such as Alo and Vuori.

Lululemon Athletica is preparing for Heidi O’Neill to take over as chief executive officer on September 8. Analysts at firms like KeyBanc have noted soft U.S. sales trends, and UBS lowered its price target, expecting the company may reduce its fiscal 2026 earnings guidance.