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Investing.com -- Shares of On (NYSE:ONON) declined 5.5% as the company announced a significant change in its leadership structure, transitioning to a single-CEO model. Martin Hoffmann, currently Co-CEO and CFO, is set to take the helm as the sole CEO, while Co-CEO Marc Maurer plans to depart the sportswear brand. This news has prompted a negative market response despite the company’s recent financial successes.
On’s leadership transition follows a period of substantial growth, with the company achieving record net sales of over CHF 2.3 billion and a net income of CHF 242 million in fiscal year 2024. The strategic shift comes as On continues to execute its "Dream On" vision, aiming to reach its 2026 targets. Marc Maurer, who has played a crucial role in the company’s expansion from a niche market player to a global brand, will remain in his role until June 30, 2025, to ensure a smooth transition, and will continue to advise the company until March 2026.
The company also unveiled the appointment of four senior leaders to bolster its executive team. This move is seen as part of On’s strategy to sustain growth and profitability. However, the stock’s decline reflects investor concerns over the departure of Maurer, a key figure in On’s rise. Analysts have weighed in on the leadership changes and their potential impact on the company’s future.
KeyBanc Capital Markets maintains an overweight rating with a price target (PT) of $68, expressing confidence in On’s ability to meet near-term goals under the new leadership structure. Jefferies, with a hold rating and a PT of $44, anticipates potential weakness in shares and risk of multiple compression, especially if upcoming financial results fall short of expectations. William Blair maintains an outperform rating but acknowledges that the market may react unfavorably to the timing of Maurer’s departure. Telsey Advisory Group also rates the stock as outperform with a PT of $67, expecting a smooth transition given Hoffmann’s deep involvement in the company’s strategy.
Investor sentiment appears cautious as On navigates this leadership transition, with the market reflecting concerns over the company’s direction in the absence of Maurer’s influence. As On prepares for its next phase, the effectiveness of the new leadership and the integration of the newly appointed senior executives will be closely monitored by stakeholders.
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