On Wednesday, TD Cowen maintained a positive outlook on On Holding AG (NYSE:ONON), raising the stock's price target to $60 from $58, while reiterating a Buy rating. The adjustment follows On Holding's third-quarter performance, which surpassed expectations in sales and EBITDA—a measure of a company's operating performance.
The firm's analyst highlighted that the new price target is based on a multiple of 34 times the forecasted FY26 earnings per share (EPS) of CHF 1.55 and 22 times the adjusted enterprise value to EBITDA, including stock-based compensation (SBC). The analyst's optimism stems from On Holding's strong quarter, which saw better-than-expected sales and profitability.
In the third quarter, On Holding AG reported robust top-line growth and full-price sell-through, which refers to products sold without markdowns. These positive results underpin the analyst's confidence in the company's growth trajectory, particularly a projected currency-neutral (cc) growth rate exceeding 30% in FY25.
Additionally, the firm's commentary on the fourth quarter suggests a strong run rate, which is the rate at which the company generates revenue before accounting for expenses. The analyst also expressed confidence in On Holding's innovation pipeline, which is anticipated to contribute to the company's growth and competitive edge.
The upgraded price target and sustained Buy rating reflect the analyst's slightly above-consensus expectations for On Holding's adjusted EBITDA margins. The margins are a key indicator of the company's financial health and efficiency, with higher margins typically signifying better profitability and control over costs.
In other recent news, On Holding AG reported impressive third-quarter results, with net sales soaring to CHF 636 million, marking a 33% year-over-year increase. This robust growth was primarily driven by strong demand across various regions, particularly in the APAC region and the Direct-to-Consumer (D2C) segment. Consequently, the company raised its full-year 2024 net sales growth expectation from 30% to 32%, projecting net sales of at least CHF 2.29 billion.
On the analyst front, Williams Trading upgraded On Holding AG from a Hold rating to Buy, increasing its price target from $40.00 to $60.00. Similarly, Telsey Advisory Group, Goldman Sachs, BTIG, and Truist Securities also raised their price targets for On Holding AG, reflecting a renewed confidence in the company's business strategy and market position.
On Holding AG also reported a gross margin of 60.6% and an EBITDA margin of 18.9% for the third quarter. These figures not only exceeded the quarter's expectations but also surpassed On's profit targets set for 2026. The company's positive momentum can be attributed to increased brand recognition, successful product launches, and strategic marketing initiatives.
InvestingPro Insights
On Holding AG's (NYSE:ONON) strong performance and positive analyst outlook are further supported by recent data from InvestingPro. The company's impressive revenue growth of 32.32% in Q3 2024 aligns with TD Cowen's observations of robust top-line growth. Additionally, On Holding's gross profit margin of 60.18% for the last twelve months ending Q3 2024 underscores the company's ability to maintain profitability, which is crucial for sustaining its growth trajectory.
InvestingPro Tips highlight that On Holding "holds more cash than debt on its balance sheet" and has "liquid assets exceed short term obligations," indicating a strong financial position that could support future innovation and expansion efforts. These factors contribute to the company's ability to invest in its product pipeline, which the analyst noted as a key driver for future growth.
The market's enthusiasm for On Holding is reflected in its stock performance, with a significant 71.46% price return over the past six months. This aligns with the analyst's optimistic view and increased price target. However, investors should note that the stock is "trading at a high earnings multiple" and "near 52-week high," which may factor into investment decisions.
For those seeking a deeper analysis, InvestingPro offers 20 additional tips for On Holding, providing a comprehensive view of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.