Analysts Upgrade On Holding AG Ratings

Analysts at Williams Trading and BTIG have upgraded their ratings for On Holding AG (ONON) to Buy from Hold/Neutral, following strong third-quarter results and promising forward guidance.

Price Target Adjustments

• Williams Trading raised its price target from $40 to $60, highlighting that On Holding’s brand management surpasses expectations.
• The firm emphasized On’s improved inventory control and increased commitment to a pull model, which it believes has mitigated previously noted risks.

Strong Quarterly Results

According to Williams Trading, “The 3Q24 results beat consensus on revenue, gross margin, and SG&A,” though EPS fell short due to unexpected foreign exchange headwinds.

BTIG Assessment

• BTIG set a $64 price target on the stock. The company exhibited strong revenue growth of 33% on a constant currency basis and an impressive gross margin over 60%.
• The analysts believe On Holding is benefiting from its direct-to-consumer (DTC) shift and improved distribution, particularly due to the completion of its Atlanta warehouse automation.
• There are potential tailwinds for 2025 as the brand gains traction in both running and lifestyle segments.

Consumer Insights

BTIG stated that recent survey findings support these insights, indicating a trend of growing brand recognition and a shift in consumer perception towards On as a performance running brand. Notably, 64% of respondents who purchased On shoes primarily use them for running, a significant increase from the previous year. Frequent shoe replacements among On’s customers imply sustainable, predictable growth.

Valuation Overview

While On Holding’s valuation trades at a premium, analysts argue it is justified by the company’s outsized growth and margin expansion, which surpasses its peers. Both firms see On’s expanding reach and product versatility as positive indicators for future performance.