On Monday, TD Cowen sustained its Buy rating for On Holding AG (NYSE:ONON) and reiterated the $48.00 price target for the company's shares. The firm's analysis indicates that On Holding is gaining traction in various market segments, including casual wear, lifestyle, and performance running. The ongoing expansion of the brand in these areas is expected to enhance the company's operational leverage and potentially lead to earnings surpassing the consensus estimates.
According to TD Cowen's assessment, if On Holding AG's earnings before interest and taxes (EBIT) margin were to align with that of Deckers Outdoor Corporation (NYSE:DECK), there is a possibility for On Holding's earnings per share (EPS) to reach CHF 3. The firm's evaluation suggests that On Holding's margins have a significant potential for growth, particularly given that the pricing of HOKA and ON products are similar, which could contribute to the company's financial performance.
The analyst's comments emphasize the underappreciated aspects of On Holding's operational leverage. Such leverage could play a crucial role in the company's financial success, as it may lead to higher profitability through increased efficiency and lower costs relative to revenue.
The reiterated price target of $48.00 reflects confidence in the company's strategic positioning and its ability to capitalize on market opportunities. TD Cowen's outlook is based on the expectation that On Holding will continue to expand its brand preference and leverage its operational strengths to outperform market expectations.
InvestingPro Insights
Aligning with TD Cowen's optimistic outlook on On Holding AG (NYSE:ONON), InvestingPro data and tips further illuminate the company's financial standing and market potential. As of the last twelve months leading to Q1 2024, On Holding AG boasts a substantial market capitalization of $12.33 billion, underscoring its significant presence in the industry. The company's revenue growth is particularly notable, with an impressive 33.66% increase, indicating robust sales performance and market expansion. Furthermore, the gross profit margin stands at a healthy 59.87%, showcasing the company's ability to maintain profitability amidst its growth endeavors.
InvestingPro Tips highlight that On Holding holds more cash than debt, suggesting a strong balance sheet, and analysts expect net income to grow this year, which could be a harbinger of further financial success. Additionally, the company's stock price has experienced a large uptick over the last six months, reflecting a 42.33% return, which could signal investor confidence in the brand's growth trajectory and operational strategy.
For investors seeking to delve deeper into On Holding AG's financials and market prospects, InvestingPro offers an array of additional tips, with 17 more insights available that could guide investment decisions. To explore these insights, visit https://www.investing.com/pro/ONON.
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