UBS Boosts On Holding Price Target on Strong Growth Outlook

On Holding AG (NYSE:ONON) saw its shares climb more than 4% intra-day today after reporting fourth-quarter earnings that exceeded analyst expectations. The Swiss athletic footwear brand delivered strong financial performance, reflecting continued growth momentum.

For the quarter, On Holding posted earnings per share (EPS) of CHF 0.27, surpassing consensus estimates of CHF 0.18. Revenue reached CHF 606.6 million, also topping the projected CHF 594.5 million.

Profitability improved significantly, with adjusted EBITDA rising 38% year-over-year to CHF 99.4 million, slightly ahead of the CHF 97.2 million estimate. The company also reported a gross margin of 62.1%, exceeding the expected 61.7%.

Reflecting on the company’s progress, Co-CEO and CFO Martin Hoffmann highlighted On’s achievements, including surpassing CHF 2.3 billion in net sales and maintaining a strong cash position approaching CHF 1 billion. Looking forward, On aims to enhance its premium brand positioning with an array of new product launches and improved customer experiences.

For 2025, On projects revenue of CHF 2.94 billion, slightly below analyst expectations of CHF 2.96 billion. However, it remains confident in sustaining its upward trajectory, targeting a constant currency net sales growth rate of at least 27% for the year. The company forecasts an adjusted EBITDA margin of 17% to 17.5%, aligning with projections and positioning itself to exceed an 18% margin by 2026.

UBS analysts reiterated a Buy rating and a $63 price target for On Holding AG (NYSE:ONON), emphasizing the brand’s robust growth trajectory and significant untapped potential in the global athletic wear market. With forecasted five-year sales and earnings per share (EPS) compound annual growth rates (CAGR) of 22% and 43%, respectively, On is positioned to become one of the fastest-growing athletic wear brands worldwide.

A key driver of On’s growth is its rising brand awareness. According to UBS Evidence Lab’s latest global athletic wear survey, On's aided brand awareness has climbed steadily over the past four years, reaching 13% in 2024, compared to just 5% in 2021. Despite this progress, On’s awareness level remains well below major competitors like Nike (91%), Puma (74%), and Jordan (59%), signaling substantial room for expansion.

The brand's growing recognition is expected to translate into increased market share, with momentum building through 2025. UBS believes that as On continues to deliver strong earnings and outperforms market expectations, investor confidence will grow, pushing the stock closer to the $63 target.

• Goldman Sachs upgraded On Holding AG to Buy from Neutral and increased the price target from $41 to $47.
• On Holding AG's strategy focuses on expanding brand recognition and innovation in athletic footwear and apparel, aiming to establish itself as a market leader.
• The company is in a strong financial position, with robust growth in revenue and operating income, and is debt-free, enhancing its growth and expansion prospects.

Goldman Sachs recently upgraded its rating on On Holding AG (NYSE:ONON) to Buy, signaling a positive outlook on the company's future performance. This decision reflects Goldman Sachs' belief in ONON's strong market position and its potential for growth. The upgrade, as reported by TheFly, also included an increase in the price target for ONON, from $41 to $47, indicating an expectation for the stock's value to rise.

On Holding AG, known for its innovative approach to athletic footwear and apparel, has been making significant strides in the market. The company's strategy focuses on expanding its brand recognition through endorsements by elite athletes, launching innovative shoe designs, and venturing into new demographics and product categories. This multifaceted approach to growth is aimed at establishing ONON as a leader in the athletic wear industry.

Financially, On Holding is in a robust position, demonstrating strong growth in revenue and operating income. The company's financial health is further bolstered by its debt-free status, which is a significant advantage in pursuing further growth and expansion opportunities. Additionally, there are prospects for margin expansion, which could lead to increased profitability in the future.

The recent analysis by Seeking Alpha highlights ONON's potential for high growth and returns, emphasizing the need for investor patience as the company executes its growth strategy. With a market capitalization of approximately $11.88 billion and a trading volume of 4.45 million shares, ONON is a noteworthy player in the market. Despite recent fluctuations in its stock price, the company's long-term growth prospects remain promising.

Goldman Sachs' upgrade and the positive outlook from Seeking Alpha underscore the confidence in ONON's strategic direction and its potential to deliver significant returns to investors. As ONON continues to innovate and expand, it is well-positioned to capitalize on the growing demand for athletic wear and footwear, making it an attractive option for investors looking for growth opportunities in the market.

On Tuesday, May 7, 2024, Telsey Advisory upgraded its rating on ONON:NYSE to Outperform, maintaining a hold position. At the time of the announcement, ONON was trading at approximately $34.18. This adjustment reflects Telsey Advisory's positive outlook on ONON, as detailed in a report by Benzinga, highlighting the company's potential benefits from the pace of product introductions and margin expansion in the first quarter.

TD Cowen has raised its price target on On Holding (ONON) stock to $38, indicating strong momentum in new customer acquisition. This adjustment comes as On Holding's stock has seen an 84% increase since its low in 2022, largely driven by the success of its Cloudmonster running shoes. Currently, the stock is trading around $31, having reached a 52-week high of $37.08 last year. Analyst John Kernan of TD Cowen believes that the company's momentum will propel the stock back to these highs and potentially beyond.

The optimism surrounding On Holding is further supported by its recent performance, with the company reporting a 31% revenue growth on a constant-currency basis in the fourth quarter. On Holding is expected to release its first-quarter 2024 results on May 14, with management projecting at least a 30% year-over-year revenue growth for the full year. TD Cowen's analysis, based on internal checks on customer acquisition and retention, suggests that On Holding is poised for continued growth, making the stock a potential buy for investors.

On Holding AG (ONON) is currently trading at $34.01 on the NYSE, experiencing a slight decrease of $0.03 or -0.0881% from its previous close. Today's trading session saw the stock fluctuating between a low of $33.66 and a high of $34.93. Over the past year, ONON has reached a peak of $37.08 and a low of $23.41. The company boasts a market capitalization of approximately $10.84 billion, with a trading volume of 4,238,516 shares.

On Holding (NYSE:ONON), the footwear manufacturer endorsed by former professional tennis player Roger Federer, experienced a decline of more than 13% today in its stock price subsequent to the release of its Q2 results and guidance for the latter part of the year. Despite displaying robust overall expansion, the sales forecast for the latter half of the year fell short of expectations, partially due to the influence of a strengthening Swiss franc.

On Holding posted Q2 sales amounting to CHF 444.3 million, representing a substantial 52.3% surge compared to the previous year. The adjusted earnings per share (EPS) for this period were CHF 0.04, contrasting with CHF 0.14 recorded in the previous year.

For the entire year of 2023, On Holding now estimates net sales totaling CHF 1.76 billion, which implies a noteworthy year-over-year growth rate of 44%. However, the projected growth rate for the second half of the year is anticipated to be approximately 30%. This is somewhat below market expectations, as the consensus was for a full-year sales forecast of CHF 1.78 billion.