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On Wednesday, UBS analyst Jay Sole increased the price target for On Holding AG (NYSE:ONON) shares to $73.00, up from the previous target of $65.00, with the stock currently trading at $53.19. The firm continues to endorse a Buy rating for the athletic wear company, now valued at $16.21 billion. Sole’s statement highlighted On Holding’s commitment to innovation and direct-to-consumer sales strategies, as well as maintaining a premium brand image, as key drivers for the company’s projected industry-leading sales growth and earnings performance. According to InvestingPro analysis, the company currently appears overvalued relative to its Fair Value.
On Holding’s robust fourth-quarter report indicated that the company is surpassing its medium-term financial objectives that were set during the Investor Day in 2023. The company’s impressive 60.63% gross profit margin and 29.36% revenue growth validate this strong performance. This has solidified UBS’s confidence in their Buy recommendation for the stock. According to Sole, On Holding is expected to achieve compound annual growth rates (CAGRs) of 20% in sales, 23% in EBITDA, and 19% in EPS over the next five years. InvestingPro data reveals 16 additional key insights about On Holding’s financial health, which has received a "GREAT" overall rating.
The UBS analyst believes that this level of growth could position On Holding as one of the fastest-growing athletic wear brands globally, justifying a premium valuation. The company’s focus areas such as innovation, performance, athletes, sports, and direct-to-consumer selling are seen as instrumental in driving this potential growth trajectory. With a current ratio of 2.66 and more cash than debt on its balance sheet, the company maintains a strong financial position to support its growth initiatives.
The price target adjustment follows On Holding’s successful execution of its strategic initiatives, which have been reflected in its latest earnings report. The company’s progress in adhering to its financial targets from the previous year’s Investor Day has been a key factor in the reassessment of its stock value.
UBS’s updated price target and sustained Buy rating signal the firm’s optimism about On Holding’s future performance in the athletic wear market. The new price target of $73.00 represents a vote of confidence in the company’s growth prospects and strategic direction.
In other recent news, On Holding AG reported strong fourth-quarter results, with earnings per share (EPS) of CHF 0.23 and an adjusted EPS of $0.33, surpassing consensus estimates. The company’s revenue growth was notable, particularly in the Asia-Pacific region, which saw a 124% increase, and direct-to-consumer sales, which rose by 48%. Analysts at TD Cowen, Bernstein, and KeyBanc Capital Markets have maintained positive ratings on the company, with price targets ranging from $64 to $70, citing the company’s robust holiday sales and strategic positioning. Bernstein highlighted that On Holding’s full-year guidance predicts at least a 27% sales growth in constant currency and an adjusted EBITDA margin improvement. Barclays (LON:BARC) raised its price target to $64, noting adjustments in earnings per share estimates for the coming years. Needham also reiterated a Buy rating, emphasizing the company’s strong brand recognition and distribution growth. The company aims for a revenue growth target of at least 27% for 2025, exceeding its three-year target, and anticipates an adjusted EBITDA margin increase. These developments reflect On Holding’s strong financial performance and positive outlook among analysts.
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