Stifel maintains Buy rating and $66 target on On Holding stock

On Tuesday, Stifel analysts maintained a Buy rating and a $66.00 price target on On Holding AG (NYSE:ONON), following the company’s latest financial performance report. The analysts highlighted On Holding’s accelerated revenue growth in the fourth quarter of 2024, which saw a 40.6% increase on a constant currency basis compared to the third quarter’s 33.2% rise. This growth was driven by positive results in both direct-to-consumer (DTC) and wholesale channels. The company, currently valued at $15.32 billion, has demonstrated strong momentum with trailing twelve-month revenues reaching $2.55 billion. According to InvestingPro analysis, the stock appears overvalued at current levels, despite showing impressive growth metrics.

The company’s adjusted EBITDA for the fourth quarter of 2024 reached CHF 99.4 million, surpassing not only Stifel’s projection of CHF 93.6 million but also the Street’s expectation of CHF 97.0 million. A notable gross margin of 62.1% was reported, which was above Stifel’s estimate of 61.5% and aligns with InvestingPro’s observation of impressive gross profit margins, currently at 60.18% for the trailing twelve months. On Holding’s guidance for fiscal year 2025 suggests revenue of CHF 2,940 million, indicating a year-over-year growth of at least 27% on a constant currency basis. This forecast exceeds Stifel’s prediction of CHF 2,874.6 million but falls slightly short of the Street’s more optimistic CHF 2,968.4 million estimate. With a high P/E ratio of 120.72 and elevated volatility (Beta: 2.35), investors seeking detailed valuation analysis can access comprehensive metrics through InvestingPro’s extensive financial data platform.

The company’s outlook for adjusted EBITDA margin in fiscal year 2025 ranges from 17.0% to 17.5%, aligning with the Street’s estimate of 17.3% but slightly below Stifel’s expectation of 17.6%. On a positive note, On Holding has also endorsed its fiscal year 2026 objectives, aiming for an adjusted EBITDA margin of over 18%. The implied adjusted EBITDA range for fiscal year 2026, between CHF 499.8 million and CHF 514.5 million, encompasses both Stifel’s estimate of CHF 505.3 million and the previous Street estimate of CHF 514.3 million.

The management of inventory, which showed an 18% increase, was also deemed well-executed by the analysts. Stifel concluded their remarks by expressing continued admiration for On Holding’s brand momentum and strong operational performance, indicating their confidence in the company’s ongoing success.

In other recent news, On Holding AG reported strong financial results, capturing the attention of multiple analyst firms. The company’s fourth-quarter earnings exceeded expectations, with Evercore ISI noting an EPS of $0.28, surpassing their own estimate of $0.17 and the consensus of $0.18. On Holding’s sales growth was impressive, with a 36% increase, according to Telsey Advisory Group, exceeding their projection of 35% and FactSet’s consensus of 33%. The gross margin also saw a record improvement to 62.1%, surpassing various analyst estimates.

Looking ahead, On Holding has provided guidance for 2025, aiming for a 27% revenue growth, slightly below some analyst expectations but still indicating strong momentum. Citi analysts highlighted that the company’s sales growth projections are above the consensus, despite slightly conservative gross margin and EBITDA forecasts. Raymond (NSE:RYMD) James noted that On Holding has a history of exceeding its revenue guidance, which may suggest potential upside.

Piper Sandler maintained an Overweight rating on On Holding, expressing confidence in the company’s ability to deliver slightly better-than-expected gross margins in the upcoming earnings report. The firm also set a $62.00 price target, emphasizing the company’s strong position despite broader market trends. Overall, analysts remain optimistic about On Holding’s growth trajectory, with several firms maintaining positive ratings and price targets.

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