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Investing.com -- Jefferies downgraded On Holding AG to Underperform from Hold, saying the Swiss athletic footwear maker’s rapid growth is likely to slow from 2025 as U.S. store openings plateau and retailer orders shift back toward Nike.
The brokerage said On’s sales growth rate would likely peak this year before moderating in 2026, when it expects sales to rise in the high-teens percentage range, below Wall Street forecasts of about 25%.
It also sees EBITDA growth halving as the company adds fixed costs from expanding its own stores and brand ambassador programs, while introducing new footwear styles that could carry higher markdown risk.
Jefferies warned that Nike’s renewed product pipeline and wholesale push would challenge On’s sell-in and sell-through momentum, reversing some of the more than 200 basis points of market share gains On captured while Nike retrenched from wholesale distribution.
The note also flagged the company’s premium pricing, with most footwear retailing for $150 to $200 or more, and a reliance on its Cloud franchise as constraints on its addressable market and a potential fashion risk.
Apparel, which makes up less than 5% of sales, is too small and expensive to meaningfully expand the brand’s reach, it added.
Jefferies lowered its price target to $40, based on a mid-teens EV/EBITDA multiple, and set a bear-case valuation of $30, citing the likelihood of multiple compression as growth slows.
The stock’s current EV/EBITDA multiple, just under 20 times, is nearing Nike’s despite Nike’s larger scale, global share lead and broader lifestyle offering, the analysts noted.