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Investing.com -- Analysts at Williams Trading and BTIG have upgraded their ratings for On Holding AG (ONON) to Buy from Hold/Neutral, following strong third-quarter results and promising forward guidance.
Williams Trading raised its price target from $40 to $60, highlighting that On Holding’s “brand management turns On beyond our expectations.”
The firm emphasized On’s improved inventory control and increased commitment to a pull model, which it believes removed the risks it had been concerned about just a week earlier.
“The 3Q24 results, which beat consensus on revenue, gross margin, and SG&A,” further support the upgraded outlook, Williams Trading added, although EPS fell short due to unexpected foreign exchange headwinds.
BTIG set a $64 price target on the stock. According to the firm, the company showed strong revenue growth of 33% on a constant currency basis and an impressive gross margin over 60%.
BTIG analysts believe On Holding is now benefiting from its direct-to-consumer (DTC) shift and improved distribution following the completion of its Atlanta warehouse automation.
They also see potential tailwinds heading into 2025 as the brand gains traction in both running and lifestyle segments.
Importantly, BTIG said its survey findings support the insights, with growing brand recognition and a shift in consumer perception towards On as a performance running brand.
BTIG noted that 64% of respondents who recently purchased On shoes primarily use them for running, a significant increase from the previous year.
Additionally, frequent shoe replacements among On’s customers suggest “sustainable, predictable growth.”
While On Holding’s valuation trades at a premium, analysts argue it is justified by the company’s “outsized growth and margin expansion,” which exceeds its peers.
Both firms view On’s expanding reach and product versatility as positive indicators for future performance.
