On Wednesday, Stifel reiterated its confidence in On Holding AG (NYSE:ONON) shares, a sports footwear and apparel company, by raising its price target to $59 from the previous $45 while maintaining a Buy rating on the stock. The adjustment reflects a positive outlook on the company's market performance and growth potential.
Stifel's analysis points to On Holding's impressive momentum in the third fiscal quarter of the year, highlighting the brand's successful expansion across various product categories, price points, and distribution channels. The firm is particularly optimistic about On Holding's foray into apparel and accessories, which supports a broader brand range and reinforces the belief in the company's multi-year growth trajectory.
The endorsement is further substantiated by the introduction of fiscal year 2026 revenue and adjusted EBITDA estimates, which align with the goals set forth during On Holding's Investor Day in October 2023. Those targets include achieving at least CHF 3.55 billion in revenue and an adjusted EBITDA margin of 18% or higher.
Stifel's enthusiasm is also fueled by the stock's year-to-date performance, which has seen On Holding's shares surge by 82.6%, significantly outpacing the S&P 500's 18.1% increase over the same period. Despite a narrowing valuation gap through the year, Stifel anticipates that On Holding's shares will continue to outperform the market as the company consistently executes its strategy.
The revised 12-month price target of $59 is based on 24.3 times Stifel's total enterprise value to fiscal year 2026 adjusted EBITDA estimate of CHF 650 million. This new target reflects a bullish stance on On Holding's financial prospects and its ability to sustain growth and profitability in the coming years.
In other recent news, On Holding AG has been the subject of multiple analyst upgrades following strong financial results. Piper Sandler assigned an Overweight rating to the company, citing a robust second quarter performance with a 29% growth in constant currency sales. The firm also expressed confidence in On Holding AG's outlook for the rest of 2024 and 2025.
KeyBanc maintained an Overweight rating on On Holding, citing strong demand, increased brand recognition, and sustained sell-through momentum. TD Cowen, Truist Securities, Baird, and Goldman Sachs also increased their price targets, maintaining positive outlooks on the company's future performance.
On Holding AG reported a 27.8% increase in net sales to CHF 567.7 million and a significant rise in net income to CHF 30.8 million. This financial performance was bolstered by the introduction of new technology, including LightSpray, and the upcoming launch of new products like the Cloudboom Strike and Cloudsurfer Next.
The company's management reaffirmed their commitment to accelerating EBIT growth, indicating a strong second half for the company. This projection is supported by a robust product pipeline, which is expected to drive both the direct-to-consumer strategy and overall business expansion. The company expects currency-adjusted sales growth of at least 30% and net sales of at least CHF 2.26 billion, with a gross margin around 60% for the full year 2024.
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