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On Monday, Citi analyst Paul Lejuez upgraded On Holding AG (NYSE: ONON) stock from Neutral to Buy, while also reducing the price target to $60 from the previous $65. The adjustment reflects a revised outlook for the company’s financial performance in the coming years, taking into account several market factors. According to InvestingPro data, the company maintains a "GREAT" financial health score, with strong fundamentals including a robust balance sheet showing more cash than debt.
Lejuez noted that the new estimates for fiscal years 2025 and 2026 have been decreased from CHF 1.05/1.42 to CHF 0.89/1.16, respectively. This change is due to unfavorable foreign exchange rates and weaker second-half sales projections. Additionally, anticipated higher tariffs and currency challenges are expected to lower gross margins, though this is somewhat mitigated by reductions in selling, general, and administrative expenses (SG&A).
For fiscal year 2025, the analyst expects On Holding AG to achieve a 23% increase in reported sales growth and a 27% growth on a constant currency basis, which aligns with the company’s guidance. However, the projected EBITDA margin of 16.8% falls short of the company’s current guidance range of 17.5-18.0%, primarily due to weaker gross margins.
Lejuez highlighted the strength of On Holding AG’s brand, particularly its status as the fastest-growing name in the athletic and softlines sectors. The brand’s strong market presence, coupled with a geographically diverse sales base and minimal sourcing exposure in China, positions it favorably in the current uncertain tariff environment.
The rating upgrade from Neutral to Buy indicates Citi’s confidence in On Holding AG’s ability to navigate market challenges and capitalize on its brand strength in the athletic and softlines markets. Investors should note that the company’s next earnings report is scheduled for May 14, 2025. For deeper insights into On Holding’s financial health and growth prospects, including 15+ additional ProTips and comprehensive valuation metrics, check out the full analysis available on InvestingPro.
In other recent news, On Holding AG has announced significant leadership changes, transitioning to a single-CEO model with Martin Hoffmann stepping in as the sole CEO. This shift follows the announcement of Co-CEO Marc Maurer’s departure, although he will remain to ensure a smooth transition until March 2026. Despite the leadership changes, the company reported impressive financial results for fiscal year 2024, with record net sales exceeding CHF 2.3 billion and a net income of CHF 242 million. Analysts have responded with varied reactions; BTIG and Truist Securities maintain a Buy rating, with price targets of $67 and $61, respectively, expressing confidence in the company’s continued growth. HSBC upgraded On Holding AG from Hold to Buy, raising the price target to $58, citing improved financial forecasts. TD Cowen also reaffirmed a Buy rating with a $64 target, highlighting the company’s robust growth strategy. Meanwhile, Jefferies holds a more cautious stance with a Hold rating and a price target of $44, noting potential risks if financial results do not meet expectations. The company has also bolstered its executive team with new senior appointments, aiming to enhance innovation and operational capacity.
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