On Holding price target raised to $50 on robust pipeline

On Wednesday, On Holding AG (NYSE:ONON) saw its price target increased by an analyst at TD Cowen. The new target is set at $50, up from the previous $48, while the stock maintains its Buy rating. The adjustment comes as the company's management projects a significant rise in EBIT dollar growth in the second half of 2024, supported by what is described as their most substantial product pipeline to date.

The analyst's optimism is further bolstered by expectations of a swift direct-to-consumer (DTC) acceleration, especially in the Americas. This confidence is reflected in the company's financial outlook, with a forecasted expansion in margins over multiple years and sustained growth that the analyst believes is not fully recognized by the current consensus.

The revised price target of $50 is based on 37 times the forecasted earnings per share (EPS) for the fiscal year 2025, and 24 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio. These metrics underscore the analyst's positive outlook on On Holding's financial performance and market positioning in the coming years.

On Holding's management has reaffirmed their commitment to accelerating EBIT growth in the latter half of 2024, indicating a strong second half for the company. This projection is supported by a robust product pipeline, which is expected to drive both the DTC strategy and overall business expansion.

Investors and market watchers may consider this price target adjustment as a sign of the company's potential in the near future. On Holding's stock will continue to be observed as the company approaches the second half of 2024, with expectations of significant financial milestones being met.

In other recent news, On Holding AG has reported significant growth in its recent quarter, with a 27.8% increase in net sales, reaching CHF 567.7 million, and a substantial rise in net income to CHF 30.8 million. Analysts from William Blair, Truist Securities, Baird, and Goldman Sachs maintained positive outlooks on the company, with each firm raising its price target. William Blair highlighted On Holding's robust performance in its wholesale channel and its continued brand strength.

On Holding has also introduced new technology, including the LightSpray technology, and anticipates the launch of new products, such as the Cloudboom Strike and Cloudsurfer Next. The company expects currency-adjusted sales growth of at least 30% and net sales of at least CHF 2.26 billion, with a gross margin around 60% for the full year 2024.

InvestingPro Insights

On Holding AG's (NYSE:ONON) recent price target increase by TD Cowen to $50 aligns with several positive metrics and InvestingPro Tips that highlight the company's robust financial health and growth prospects. An InvestingPro Tip notes that On Holding holds more cash than debt on its balance sheet, a strong indicator of financial stability. Moreover, analysts are optimistic about the company's net income growth and anticipate a sales increase in the current year, which could be a driving force behind the stock's bullish outlook.

From a data perspective, On Holding's market capitalization stands at a solid $13.16 billion, with a notable revenue growth of 33.66% over the last twelve months as of Q1 2024. This growth is underpinned by an impressive gross profit margin of 59.87%, reflecting the company's efficiency in managing its production costs and maximizing its sales revenue. Additionally, the stock has experienced a significant return over the last week, with a 11.69% price total return, which may catch the eye of short-term investors.

While the company's P/E ratio is high at 87.81, indicating a premium market valuation, this could be justified by the company's growth trajectory and the high expectations of future earnings. For investors seeking detailed analysis and further insights, InvestingPro offers additional tips that delve into On Holding's financials and market performance. Visit InvestingPro for a comprehensive list of tips and metrics to inform your investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.