On Tuesday, BTIG upgraded On Holding AG (NYSE:ONON) stock from Neutral to Buy, setting a price target of $64.00. The firm's analysis indicates a positive outlook for the company's financial performance, highlighting the strong third-quarter results. The quarter showed a considerable 33% growth in constant currency revenue and gross margins surpassing 60%.
The upgrade reflects BTIG's confidence in On Holding's current momentum and future earnings potential. This is a shift from the second quarter, where direct-to-consumer (DTC) sales were significantly impacted.
The firm anticipates that On Holding will continue to see growth, especially as it benefits from a shift towards more DTC sales, overcomes past challenges like EMEA door closures, and gains from efficiencies brought by its new Atlanta warehouse automation.
BTIG also points to the company's robust product pipeline and increasing brand recognition, particularly in the United States where brand awareness has doubled year-over-year.
This growth in brand awareness is attributed to successful marketing investments. The firm's statement underlines the expectation that these factors will continue to drive On Holding's performance into 2025.
The analyst's comments underscore the company's recent achievements and future prospects. "We upgrade ONON to Buy from Neutral. We view Q3 as a representation of ONON's true top-line momentum and go-forward earnings power, versus Q2 when the business was heavily constrained, especially at DTC," the analyst noted.
Furthermore, the report mentions the upcoming tailwinds that are expected to support the company's growth trajectory over the next few years.
Investors are now watching On Holding AG as the company's stock receives a more optimistic outlook from BTIG, with a significant increase in its price target to $64.00. The endorsement from the firm signals potential for the stock's performance in the market, as On Holding AG continues to execute its growth strategies and capitalize on its expanding market presence.
In other recent news, On Holding AG reported robust earnings and revenue results, with third-quarter net sales reaching CHF 636 million, a 33% increase from the previous year. The company also raised its full-year 2024 net sales growth expectation from 30% to 32%, projecting net sales of at least CHF 2.29 billion.
In response to these developments, Goldman Sachs (NYSE:GS) upgraded On Holding's price target to $57, maintaining a buy rating. Concurrently, Truist Securities raised its price target for On Holding AG to $61.00, citing strong demand and growth acceleration.
On Holding's recent performance was driven by a surge in the APAC region, particularly China, and growth in its Direct-to-Consumer (D2C) segment. Goldman Sachs revised its full-year 2024 and 2025 constant currency sales growth estimates to 31.9% and 25.4%, respectively, in light of these results.
According to the analysts, the company's positive momentum can be attributed to increased brand recognition, successful product launches, and strategic marketing initiatives.
These recent developments indicate a strong growth trajectory for On Holding AG, driven by product innovation and a focus on direct-to-consumer sales.
As part of its long-term strategy, On Holding AG plans to maintain a gross profit margin above 60% and an adjusted EBITDA margin of 18% over the next two years, with investments focusing on innovation and sustainability.
InvestingPro Insights
On Holding AG's recent upgrade by BTIG is further supported by several key financial metrics and insights from InvestingPro. The company's impressive revenue growth of 28.49% over the last twelve months aligns with BTIG's observations of strong third-quarter results. This growth trajectory is expected to continue, as one InvestingPro Tip indicates that analysts anticipate sales growth in the current year.
The company's gross profit margin of 59.97% for the last twelve months corroborates BTIG's report of margins surpassing 60%. This is reinforced by an InvestingPro Tip highlighting On Holding's impressive gross profit margins, which contribute to its financial strength.
Moreover, On Holding's market capitalization of $16.87 billion and its trading near its 52-week high (97.44% of the high) reflect the market's positive sentiment, aligning with BTIG's upgraded outlook. The company's strong financial position is further evidenced by an InvestingPro Tip noting that it holds more cash than debt on its balance sheet.
For investors seeking a comprehensive analysis, InvestingPro offers 21 additional tips for On Holding AG, providing a deeper understanding of the company's financial health and market position.
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