On Holding AG stock maintains buy rating, $61 target at Truist

Tuesday, On Holding AG (NYSE:ONON), the $15.3 billion market cap athletic footwear company, saw a low double-digit percentage (LDD%) increase in pre-market trading following a strong fourth-quarter performance and positive guidance for 2025. Truist Securities has reiterated a Buy rating and a $61.00 price target on the company’s stock, aligning with InvestingPro data showing analyst targets ranging from $49.91 to $75.02. The endorsement comes after On Holding AG surpassed market expectations with its recent financial results and future projections.

The company reported approximately 36% revenue growth, which translates to roughly 41% year-over-year growth on a constant currency basis, surpassing the Street’s estimate of around 33%. Gross margins (GMs) were also higher than anticipated, coming in at 62.1% against predictions of about 61.6%, continuing the company’s track record of impressive margins as noted in InvestingPro’s analysis. Furthermore, On Holding AG’s EBITDA reached $99.4 million, representing a 16.4% margin, which is slightly above the Street’s forecast of $97 million and 16.3%. The company maintains a strong financial position with an overall health score of "GREAT" according to InvestingPro’s comprehensive assessment.

Truist Securities’ analyst noted the company’s accelerating momentum, especially in the direct-to-consumer (DTC) segment, which contributed to the fourth-quarter beat. This performance has set a high bar for the brand, which has managed to excel despite investor caution towards consumer brands in the current economic environment.

Looking ahead, On Holding AG has provided guidance for fiscal year 2025, projecting sales growth of at least 27% on a constant currency basis. The company also anticipates maintaining gross margins around 60.5%, consistent with the FY24 level, and improving EBITDA margins to a range of 17.0%-17.5%, up from 16.7% in FY24. This outlook aligns with InvestingPro’s analysis, which indicates strong sales growth expectations and solid profitability metrics for the coming year. For deeper insights into On Holding’s growth trajectory and comprehensive financial analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

The analyst highlighted the strong underlying demand trends for On Holding AG, bolstered by increased brand awareness following the Olympics, a partnership with celebrity Zendaya, and successful new launches in both footwear and apparel. These factors are expected to continue driving the brand’s growth and performance in the coming years. With a beta of 2.35 and strong liquidity metrics, including a current ratio of 2.91, the company appears well-positioned to execute its growth strategy while maintaining financial stability.

In other recent news, On Holding AG reported a robust financial performance for Q4 2024, with net sales increasing by 40.6% to CHF 606.6 million. The company’s full-year net sales reached CHF 2.32 billion, marking a 33.2% growth at constant currency. On Holding AG has set a positive outlook for 2025, aiming for net sales of at least CHF 2.94 billion, representing a constant currency growth rate of at least 27%. The company plans to maintain a gross profit margin around 60.5% and targets an adjusted EBITDA margin of 17-17.5%. Strategic initiatives include expanding its retail presence, particularly in China, and launching new products such as the Cloudpoom Max and a footwear line co-created with Zendaya. On Holding AG also achieved a record 48.8% share in direct-to-consumer sales for the quarter, highlighting its effective retail and e-commerce strategies. The company’s expansion efforts in key markets, such as the Americas, EMEA, and APAC, contributed to its impressive growth, with APAC showing a remarkable 124.6% increase in constant currency. Meanwhile, the company continues to face potential challenges such as supply chain constraints and market saturation in the premium sportswear market.

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