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On Tuesday, Barclays (LON:BARC) analyst Adrienne Yih increased the price target for On Holding AG (NYSE:ONON) shares to $64, up from the previous target of $63, while retaining an Overweight rating on the stock. According to InvestingPro data, On Holding currently maintains an impressive "GREAT" financial health score, with analysts projecting robust sales growth of 29% for fiscal year 2024.
Yih’s decision to adjust the price target follows a detailed examination of the company’s financial projections for the coming years. The analyst’s forecast for On Holding AG’s adjusted earnings per share (EPS) remains at CHF 0.97 for FY25, with a new estimate of CHF 1.57 for FY27. The FY26 EPS estimate saw a minor revision, increasing from CHF 1.21 to CHF 1.24. The company’s strong financial foundation is evident in its current ratio of 2.91, indicating robust liquidity with assets well exceeding short-term obligations.
The analysis by Barclays indicates that the FY25 and FY26 estimates have not significantly changed. The assessment points to a slight decrease in gross margin (GM) and an increase in selling, general, and administrative expenses (SG&A). However, these changes are balanced by reductions in depreciation and amortization (D&A) as well as interest expenses.
The revised price target of $64 is based on applying a next twelve months (NTM) price-to-earnings (P/E) multiple of 45 times to the company’s FY26 adjusted EPS, which has been converted from CHF to USD at a rate of 0.8779 USD/CHF. This results in an adjusted EPS of USD $1.41 for FY26.
Barclays highlights that the current Street NTM P/E multiple for On Holding AG is approximately 42 times, which is slightly lower than the multiple used to determine the new price target. The slight increase in the price target reflects the firm’s positive outlook on the company’s financial performance in the upcoming years.
In other recent news, On Holding AG has reported a significant increase in its financial performance, with a 40.6% rise in net sales for the fourth quarter of 2024, reaching CHF 606.6 million. The company’s full-year net sales totaled CHF 2.32 billion, marking a 33.2% growth at constant currency. Analysts at Needham and Truist Securities have reiterated their Buy ratings on the company’s stock, with price targets set at $64 and $61, respectively, citing strong momentum and positive future projections. The company has set ambitious targets for 2025, aiming for at least a 27% growth in net sales and maintaining gross margins around 60.5%. On Holding AG’s adjusted EBITDA for the quarter reached $99.4 million, slightly exceeding market expectations. The company’s direct-to-consumer sales strategy has proven effective, with a record 48.8% share in Q4. Future growth is expected to be driven by expansion plans in China and new product launches, including collaborations with high-profile figures like Zendaya.
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