Shares of Adidas (ADDYY) are trading higher on Tuesday after the company raised its full-year 2024 guidance. The sportswear giant is now targeting an operating profit of $743 million, buoyed by strong demand for its classic footwear products and the sale of remaining Yeezy inventory.

Yahoo Finance's Julie Hyman and Josh Lipton break down the details.

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Video Transcript

JOSH LIPTON: Moving on, Adidas shares getting a boost, after the company posts upbeat guidance following its preliminary results for the first quarter of 2024. So that was the story here, raising guidance, Julie, specifically its profit target for the year. They're now looking to generate an operating profit of about $743 million. That was up from the previous target. And it sounds like that can basically be pinned on demand for classic sneakers, and sales of what remains of its stockpile of Yeezy footwear too.

JULIE HYMAN: Yeah, that's something that they've been trying to work down. There was a commentary from Aneesha Sherman over at Bernstein who covers the stock, and she said Yeezy did help, but it didn't drive the beat. To your point, it was more a resurgence that we have seen in demand for Sambas and some of those other classic sneakers here.

And she also says management really emphasized that Yeezy was not what was contributing here. What's also interesting is that this result comes a day after we got an upgrade from Morgan Stanley, a double upgrade, in fact, to overweight from the stock, saying that growth in top line momentum was seen outweighing risks to the equity story. The stock is up about 22% from its low back in November, but it's still down pretty sharply from where it was back in 2021, its most recent high.

JOSH LIPTON: Yeah. Last year, I mean, obviously it was challenging. Net sales fell. They canceled that partnership with Yeezy namesake Kanye West. The company has said they intend to return to growth this year. They did, though, call out unfavorable currency effects though, and how that's going to probably impact profitability this year. So one to watch.