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On Tuesday, Evercore ISI confirmed its positive outlook on On Holding AG (NYSE:ONON), reiterating an Outperform rating and a $60.00 price target. The firm’s analysts highlighted the company’s strong fourth-quarter performance, which surpassed expectations with earnings per share (EPS) of $0.28, compared to the anticipated $0.17 by Evercore ISI and $0.18 by the consensus. According to InvestingPro data, On Holding commands a market capitalization of $15.32 billion and maintains impressive gross profit margins of 60.18%.
On Holding AG reported robust direct-to-consumer (DTC) sales growth, continuing at a 48% year-over-year increase, excluding foreign exchange effects. This figure represents a slight deceleration from the previous quarter but remained ahead of the guidance, which had forecasted a 3-4 percentage point deceleration. The wholesale segment also showed significant acceleration with a 34% year-over-year growth, surpassing the high 20s growth expected in the fourth quarter guidance. The company’s overall revenue growth stands at 26.12%, as reported by InvestingPro, which offers 14 additional key insights about On Holding’s growth trajectory.
The company’s outlook for 2025 was particularly noteworthy, as it aims to achieve over 27% year-over-year growth, excluding foreign exchange effects. On Holding AG indicated that 2025 would be a year led by DTC sales and that quarter-to-date trends have started well, aligning with preliminary comments made at the ICR conference.
However, the margin progress for 2025 is projected to be slightly slower than previously expected, largely due to foreign exchange headwinds. The company is guiding a gross margin of around 60.5% for 2025, slightly below Evercore ISI’s estimate of 60.9% and the Street’s 60.6%. The adjusted EBITDA margin is expected to be between 17% and 17.5%, compared to Evercore ISI’s estimate of 18% and the Street’s 17.3%.
Despite these minor adjustments, Evercore ISI believes the guidance offers enough growth and margin expansion to alleviate concerns that On Holding AG’s operating model might be slowing down as it progresses through its 2023-2026 Analyst Day plan.
In other recent news, On Holding AG has reported a significant 36% increase in sales for 2024, surpassing analyst expectations. The company’s gross margin improved to 62.1%, exceeding projections from firms like Telsey Advisory Group and Raymond (NSE:RYMD) James. Analysts from Telsey, Citi, and Raymond James have maintained positive outlooks on On Holding, with price targets set at $67, $65, and $68, respectively. Piper Sandler also reiterated an Overweight rating with a $62 target, highlighting On Holding as a top stock pick. UBS adjusted its price target to $65 while maintaining a Buy rating, citing strong brand momentum during the holiday season.
On Holding’s direct-to-consumer sales saw a remarkable 43% growth, contributing significantly to its revenue surge. The company has set a 2025 revenue growth target of 27%, slightly below some analyst estimates but still indicating strong market performance. While the company’s guidance for gross and EBITDA margins in 2025 is slightly below consensus, analysts expect these figures to be conservative given On Holding’s history of exceeding forecasts. The company’s performance in regions like EMEA and Asia-Pacific was notably strong, although growth in the Americas was slightly below expectations. Investors are closely watching On Holding’s upcoming earnings release, which is anticipated to have a significant impact on the stock’s market valuation.
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