On Tuesday, BofA Securities provided a fresh outlook on On Holding AG (NYSE: ONON) stock, reinstating the company’s coverage with a Buy rating and setting a price target of $73.00. The analyst highlighted the company’s significant upside potential, noting that the target price suggests approximately a 34% increase from current levels.
This optimism comes as On Holding demonstrates impressive financial strength, with a "GREAT" overall health score according to InvestingPro data, and remarkable market performance, delivering a 105% return over the past year.
Cota’s optimism for On Holding is rooted in several key factors. He points to the brand’s momentum, its successful retail integration, and the potential for diversification. Additionally, the analyst believes that On Holding’s superior pricing power and innovative initiatives, such as LightSpray technology, will support the company’s market share expansion.
The company’s strong pricing power is reflected in its impressive 60.2% gross profit margin, though InvestingPro analysis indicates the stock may be trading above its Fair Value at current levels.
The projection for On Holding’s growth is substantial, with expectations for the company to increase its share of the sportswear brand market from 2% in 2024, with sales of CHF 2 billion, to between 3-4% by 2030, with projected sales of CHF 7 billion. Cota notes that this forecast is kept stable for the time being.
Current financials support this growth trajectory, with revenue growing at 26.1% and the company maintaining a healthy balance sheet with more cash than debt. For deeper insights into On Holding’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.
The analysis by BofA Securities also compares On Holding to its larger peers, excluding industry giants Nike (NYSE:NKE) and Adidas (OTC:ADDYY). Cota indicates that these competitors currently hold a 7% market share, which could imply a long-term sales potential of over CHF 20 billion for On Holding if it were to match that share.
Cota’s assessment is further bolstered by his sales growth forecast for On Holding. He anticipates a 28% organic sales compound annual growth rate (CAGR) from 2023 to 2027. This estimate places BofA Securities’ projections 1-8% above the Visible Alpha consensus on sales and EBIT for the years 2024 to 2027. The analyst’s outlook reflects a strong conviction in On Holding’s performance and market positioning in the coming years.
In other recent news, On Holding AG has been the focus of several analyst upgrades and price target revisions following impressive Q3 earnings. The company reported net sales of CHF 636 million, a 33% increase from the previous year, primarily driven by strong demand across various regions. This robust performance led to an upward revision of On Holding’s full-year 2024 net sales growth expectation from 30% to 32%, forecasting net sales of at least CHF 2.29 billion.
Analysts from TD Cowen, Raymond (NS:RYMD) James, and Williams Trading have all raised their price targets for On Holding, highlighting the company’s strong performance and growth prospects. TD Cowen and Raymond James maintained a "Buy" rating, while Williams Trading upgraded from a "Hold" to a "Buy" rating.
UBS analysts have also maintained their Buy rating on On Holding, predicting substantial growth for the athletic wear brand, with a roughly 22% five-year sales compound annual growth rate (CAGR) and an approximately 43% five-year earnings per share (EPS) CAGR. Citi, however, initiated coverage on On Holding with a Neutral rating, highlighting the company’s rapid sales growth and impressive gross margins.
These recent developments underscore the positive trajectory for On Holding AG.
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