How are energy investors positioned?
On Friday, Piper Sandler reiterated its Overweight rating on On Holding AG (NYSE:ONON) shares, maintaining a $62.00 price target. The stock currently trades at $46.69, having declined 14.75% year-to-date. According to InvestingPro analysis, which offers comprehensive insights through its Pro Research Reports covering 1,400+ top stocks, the company appears slightly overvalued at current levels. The firm’s analysis suggests that On Holding remains one of their top stock picks as the company prepares to report its fourth-quarter earnings for 2024 on March 4. According to Piper Sandler, the stock has seen a de-risking trend year-to-date due to a broader market rotation away from growth and high-multiple stocks. This trend is also influenced by the performance of other stocks that have shown volatility in their fundamentals or guidance during this earnings season.
Analysts at Piper Sandler have set expectations for a slight beat in On Holding’s fourth-quarter performance, citing their anticipation of higher gross margins due to the company’s full-price stance during the holiday season. This aligns with the company’s already impressive gross profit margin of 60.18% over the last twelve months, as reported by InvestingPro. This expectation is slightly above the consensus. However, expectations for the 2025 guidance are more conservative, with analysts predicting a sales growth guide of 25% on a constant currency basis, or 26-27% reported, factoring in a 1-2 point benefit from foreign exchange. This forecast falls just below the consensus estimate of 28% growth.
Regarding profitability, Piper Sandler expects On Holding’s EBITDA margin to be around 17.6%, which would be a 90 basis point increase. The firm acknowledges that while On Holding’s valuation remains high at 29 times EV/EBITDA, the multiple has contracted by 6-8 times in the previous month. InvestingPro data shows the current EV/EBITDA multiple at 50.41x, reflecting the premium valuation. Despite these high multiples, the company maintains a "GREAT" overall financial health score, suggesting strong fundamentals. Looking at the longer-term objectives presented during the company’s 2023 Analyst Day, Piper Sandler views the goal of CHF 6 billion in sales and CHF 3.00+ in earnings power as a realistic target for On Holding in the future.
In other recent news, On Holding AG has seen various developments from analyst firms regarding its financial outlook. UBS analyst Jay Sole adjusted the price target for the company to $65 while maintaining a Buy rating, expecting On Holding to report earnings per share of 5 cents, driven by strong sales and margins. Truist Securities also upheld its Buy rating and $61 price target despite a recent decline in share value, attributing this to market misinterpretations of sales data and expressing confidence in the company’s U.S. Direct-to-Consumer performance. Meanwhile, KeyBanc Capital Markets raised its price target to $68, citing On Holding’s strong brand momentum and product innovations as key growth drivers.
Citi analyst Paul Lejuez maintained a Neutral rating with a $65 price target, highlighting the company’s strong positioning in the footwear market and potential for double-digit growth. Stifel analysts reaffirmed their Buy rating with a $66 price target, noting On Holding’s momentum through the holiday season and brand recognition gains in the U.S. market. They are optimistic about the company’s ability to reach its financial targets for fiscal year 2026, which include CHF 3.6 billion in revenue and EBITDA margins exceeding 18%. These developments reflect a broad range of analyst perspectives, with most maintaining a positive outlook on On Holding’s growth trajectory.
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