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On Wednesday, Bernstein analysts reaffirmed their positive stance on On Holding AG (NYSE:ONON), maintaining an Outperform rating and a $70.00 price target for the company’s shares. With a current market capitalization of $16.2 billion and impressive gross margins of 60.6%, On Holding has established itself as a significant player in the athletic apparel market. The research firm highlighted the athletic apparel and shoe company’s strong finish to 2024, propelled by increased direct-to-consumer (DTC) sales and full-price selling during the holiday season. These factors contributed to a boost in both sales and margins, with the brand showing continued regional strength. According to InvestingPro data, the company achieved remarkable revenue growth of 29.4% in the last twelve months, while maintaining strong financial health with an overall score of "GREAT."
Bernstein analysts noted that On Holding’s fourth-quarter results surpassed sales expectations and met margin forecasts. The company’s performance at the start of 2025 has been robust, suggesting potential for outperformance against guidance, especially in the latter half of the year. The full-year guidance provided by On Holding was above market expectations and aligned with consensus, predicting at least a 27% constant currency sales growth and an adjusted EBITDA margin improvement of 30-80 basis points.
The guidance is front-loaded, reflecting strong current demand trends and order books as of the first quarter. Bernstein sees the possibility for sales growth to exceed expectations in the second half of the year, which includes a conservative outlook due to macroeconomic uncertainties. Margins are also expected to benefit from sustained full-price selling in 2025 year-to-date, despite a general dip in consumer sentiment.
On Holding AG remains Bernstein’s preferred stock for short-term upside, as mentioned in their 2025 Outlook. The firm’s analysts recommend purchasing the shares, noting that the stock is still down 7% year-to-date due to macroeconomic concerns that they believe do not significantly impact On Holding. While the stock currently trades above its InvestingPro Fair Value, the continued strength in the company’s core business activities presents an opportunity for investors to evaluate, according to Bernstein’s assessment. For a deeper understanding of On Holding’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which includes detailed analysis of the company’s financial health and future potential.
In other recent news, On Holding AG has reported impressive financial results, showcasing a 40.6% increase in Q4 net sales to CHF 606.6 million and a full-year net sales figure of CHF 2.32 billion, reflecting a 33.2% growth at constant currency. The company has set a positive outlook for 2025, with a target for net sales of at least CHF 2.94 billion, aiming for a constant currency growth rate of at least 27%. Analyst firms have responded positively to On Holding’s performance, with KeyBanc maintaining an Overweight rating and a $68 price target, citing the company’s effective execution and strategic initiatives. Barclays (LON:BARC) has also raised its price target for On Holding to $64, emphasizing its positive outlook on the company’s financial performance in the upcoming years. Needham reiterated its Buy rating with a $64 price target, highlighting On Holding’s strong momentum and robust margin performance. Truist Securities maintained a Buy rating and a $61 price target, noting the company’s accelerating momentum, particularly in its direct-to-consumer segment. These developments reflect a strong confidence in On Holding’s growth trajectory and financial health.
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