HSBC raises ONON stock rating, target to $58 from $52

On Tuesday, HSBC analyst Akshay Gupta upgraded On Holding AG (NYSE:ONON) stock from Hold to Buy and increased the price target to $58.00, up from the previous target of $52.00. The upgrade aligns with the broader analyst sentiment, as InvestingPro data shows a strong Buy consensus with seven analysts recently revising earnings estimates upward. Gupta’s decision reflects an adjustment to the forecasted adjusted EBITDA, which is now 5% higher for the years 2025-26. Additionally, the upgrade incorporates a one-year advancement in the Discounted Cash Flow (DCF) model, coming just two days before the company’s scheduled earnings release on March 13.

The analyst’s commentary highlighted the shift in perspective towards On Holding AG’s stock. Initially, HSBC had initiated coverage with a Hold rating in September 2024, acknowledging the company’s rapid growth potential but remaining cautious due to an unconvincing risk-reward balance at the time. The company has demonstrated strong performance with 29.36% revenue growth in the last twelve months, though the stock has experienced a significant 12.64% decline over the past week. This recent dip in share price has presented what Gupta sees as an attractive entry point for investors.

Gupta pointed out that On Holding AG distinguishes itself within the sporting goods sector through its management structure. The company’s co-founders, who are also key executive members, have significant personal investment in the company’s success. This contrasts with other companies in the industry, which are often led by CEOs focused on short-term sales and profit metrics. The effectiveness of this management approach is reflected in the company’s impressive 60.63% gross profit margin and strong financial health, as indicated by InvestingPro’s comprehensive analysis. According to Gupta, On Holding AG’s leadership is positioned to make strategic decisions that could benefit the company in the long term.

The analyst’s upgrade comes after a comprehensive review of On Holding AG’s financials and strategic positioning. Gupta’s analysis suggests that the company is well-positioned to continue its growth trajectory, leading to the revised Buy rating and higher price target.

Investors and market watchers will be keeping a close eye on On Holding AG’s stock performance following this rating upgrade and price target increase by HSBC. The company’s unique management approach and strong financial results have contributed to a more optimistic outlook from analysts.

In other recent news, On Holding AG’s financial performance has been a focal point for analysts. The company reported a robust fourth-quarter, with significant growth in the Asia-Pacific region and a notable rise in direct-to-consumer sales. UBS raised its price target for On Holding to $73, maintaining a Buy rating, citing the company’s commitment to innovation and its premium brand image as drivers for projected sales and earnings growth. Piper Sandler also maintained an Overweight rating, highlighting On Holding’s unique market positioning and potential stock value range between $42 and $75. TD Cowen kept a Buy rating but slightly reduced the price target to $64, acknowledging the company’s strong Q4 results and growth prospects.

Bernstein reaffirmed an Outperform rating with a $70 target, noting the company’s strong finish to 2024 and positive start to 2025, driven by increased direct-to-consumer sales and full-price selling. KeyBanc Capital Markets maintained an Overweight rating with a $68 target, impressed by On Holding’s financial results and FY25 outlook. The firm’s analysis suggests that On Holding’s strategic initiatives and global brand recognition are contributing to its standout performance. These developments reflect the company’s strategic positioning and growth potential, as well as the confidence analysts have in its future trajectory.

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