Stock market today: S&P 500 ekes out closing record high despite wobble in chips
Investing.com -- Raymond James downgraded ON Holding AG to Outperform from Strong Buy given the near-term macro pressures including currency volatility and higher tariffs, though it maintained a positive long-term outlook on the Swiss sportswear brand.
The firm cut earnings estimates for 2025 due to the stronger Swiss franc and updated tariff assumptions, as about 90% of ONON’s footwear is sourced from Vietnam.
While DTC momentum appears healthy, wholesale growth is expected to slow sequentially in Q2 following earlier front-loaded inventory shipments tied to product launches.
“We see 2Q being less clean due to FX, tariffs, and slower Wholesale growth, due to timing of launches” the note said, adding that these factors are expected to weigh on margins and reported growth despite solid underlying demand.
“We remain bullish on ONON as a long-term story and believe underlying demand and growth will remain strong in 2025 and beyond”
The firm now models revenue growth of 23.7% and gross margin of 59.8% in Q2, below Street estimates.
Still, Raymond (NSE:RYMD) James pointed to continued strength in ONON’s direct-to-consumer business — aided by robust web traffic and search trends, and emphasized growth opportunities across newer segments like apparel, retail, and the Asia-Pacific region.
The Cloud 6 running shoe, priced above its predecessor, is helping support pricing power even amid margin pressures.
The firm now assumes an 8% FX headwind for 2025 and widened its tariff impact estimates, trimming gross margin forecasts by 60 basis points to 60.0%. ONON’s EBITDA margin is still expected to expand to 16.9% in 2025.
Despite the downgrade, the report reiterated confidence in ONON’s brand strength, innovation pipeline, and global distribution expansion, particularly in China, with expectations for stronger growth in the second half of the year.