Jefferies downgrades On Holding stock to Underperform on growth concerns

Investing.com - Swiss athletic footwear company On Holding AG (NYSE:ONON), currently trading at $49.81 with a market cap of $16.1 billion and impressive gross margins of 60.6%, received a downgrade from Jefferies on Wednesday, moving from Hold to Underperform with a price target reduction to $40.00 from $50.00. According to InvestingPro data, the company has demonstrated strong revenue growth of 34.9% over the last twelve months.

The downgrade reflects Jefferies’ view that 2025 will likely represent the peak in On Holding’s sales growth rate as U.S. door count expansion slows and sell-in moderates in 2026 when retailer orders potentially shift back to Nike (NYSE:NKE).

Jefferies cited On Holding’s high pricing strategy and narrow product assortment as factors limiting its total addressable market (TAM), creating potential challenges for sustained growth.

The investment firm projects sales and EBITDA estimates approximately 5% and 10% below consensus Street expectations, respectively, citing slowing growth and anticipated headwinds in 2026.

Jefferies’ reduced $40 price target reflects a mid-teens EV/EBITDA multiple, with the firm also noting a bear case price target of $30 and expectations that valuation multiples will compress as growth decelerates.

In other recent news, On Holding AG has reported strong second-quarter results, prompting several analysts to adjust their ratings and price targets. The company achieved a 38% currency-adjusted revenue increase and improved its gross margin by 157 basis points, alongside a 220 basis point increase in EBITDA margin. These results led BTIG to reiterate its Buy rating with a $70.00 price target, citing the company’s robust performance despite facing tariff and foreign exchange challenges. Similarly, Williams Trading raised its price target from $63.00 to $70.00, maintaining a Buy rating based on the strong quarterly performance.

Truist Securities also reiterated its Buy rating with a $69.00 price target, following the company’s results that exceeded expectations. UBS maintained its Buy rating, setting a price target of $75.00, and noted the solid revenue trends observed in the second quarter. UBS anticipates that On Holding might raise its fiscal year 2025 sales growth outlook beyond the current 28%. However, TD Cowen lowered its price target to $60.00 due to ongoing concerns about foreign exchange impacts and tariff uncertainties, while still maintaining a Buy rating. These developments reflect a mixed but generally positive outlook from analysts regarding On Holding’s recent performance.

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