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On Wednesday, Stifel analysts increased the price target for On Holding AG (NYSE:ONON) to $66.00, up from the previous $57.00, while reaffirming a Buy rating on the stock. The revision follows On Holding’s impressive first-quarter performance, which analysts believe further positions the company as a leader in its sector. According to InvestingPro data, the company has demonstrated remarkable momentum with a 58% return over the past year and maintains a "GREAT" financial health score, supported by strong fundamentals including a solid balance sheet with more cash than debt.
The company reported a substantial 43% growth in constant currency revenue, driven by significant execution on key growth drivers, notably in the Asia-Pacific region, which saw a 129% increase in constant currency revenue. The growth was well-supported across distribution channels, with Wholesale and Direct-to-Consumer (DTC) revenues up 38.6% and 42.4% in constant currency, respectively. InvestingPro data reveals the company’s impressive trailing twelve-month revenue growth of 34.92%, accompanied by robust gross profit margins of 60.62%.
The momentum is attributed to the successful launch of products such as the Cloud 6 and Cloudsurfer 2. Marketing initiatives, including high-profile campaigns featuring celebrities like Zendaya and FKA twigs, have also contributed to heightened brand interest.
Looking forward, On Holding’s FY25 revenue guidance indicates a 28% increase in constant currency revenue. This guidance takes into account some of the gains from the first quarter. Despite revising the gross margin outlook slightly downward to 60.0%-60.5%, compared to the prior 60.5%, analysts note that the company is adeptly navigating tariff challenges.
Foreign exchange volatility is acknowledged as a headwind to reported results, but Stifel analysts emphasize that it does not detract from the underlying momentum of the brand. With shares reflecting a valuation premium, the new $66 target price is based on 27.5 times the expected Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) on the company’s projected adjusted EBITDA of CHF 631.5 million for Calendar Year 2026.
In other recent news, On Holding AG has seen a series of positive developments with multiple financial firms adjusting their price targets and maintaining favorable ratings. BofA Securities raised its price target for On Holding AG to $75, citing stronger-than-expected organic sales growth and anticipated price increases in the U.S. Truist Securities also increased its target to $69, highlighting the company’s robust growth trajectory and strong brand performance. Bernstein maintained its $70 target, emphasizing On Holding’s momentum and the company’s ability to surpass revenue estimates. KeyBanc Capital Markets adjusted its price target to $68, attributing this to the company’s successful branding efforts and premium product positioning. TD Cowen raised its target to $63, noting On Holding AG’s strong market position and potential for financial surprises. These recent analyst updates reflect a consensus of optimism around On Holding AG’s financial health and growth potential, underscoring the company’s resilience in a challenging economic environment.
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