Stifel's Upgraded Price Target for On Holding AG Sparks Enthusiasm

Stifel’s Confidence in On Holding AG’s Growth

Recently, Stifel reaffirmed its positive outlook on On Holding AG (NYSE:ONON), a prominent player in the sports footwear and apparel industry. The firm raised its price target for the stock from $45 to an impressive $59. This adjustment illustrates not only Stifel's confidence but also reflects the potential growth trajectory of On Holding in the competitive market.

Momentum in Performance and Expansion

Stifel’s analysis delves into the remarkable success On Holding has experienced in the third quarter. The brand has strategically expanded into various product categories and distribution channels, driving impressive momentum. Furthermore, the company's recent ventures into apparel and accessories highlight its dedication to diversifying options for consumers, endorsing a broader brand presence.

Financial Targets and Future Outlook

As part of its bullish stance on On Holding, Stifel has introduced revenue estimates for fiscal year 2026, aligning with the ambitious goals shared during an Investor Day earlier this year. The targets set aim to surpass CHF 3.55 billion in revenue and achieve an adjusted EBITDA margin of at least 18%. This alignment of forecasts reassures investors about the company's stability and growth.

Performance Comparison and Market Position

Another key point that strengthens Stifel's optimism is On Holding's performance relative to broader market trends. Year-to-date, shares of On Holding have skyrocketed by 82.6%, a stark contrast to the S&P 500’s increase of just 18.1%. This significant outperformance builds a compelling case for Stifel's belief in the brand's robust strategy and execution.

Valuation Insights

The newly revised target of $59 per share reflects a valuation based on Stifel's adjusted EBITDA estimate of CHF 650 million for fiscal year 2026, calculated at 24.3 times enterprise value. This metric indicates a strong financial foundation and a promising outlook for On Holding as it moves forward in a competitive market.

Analyst Upgrades and Market Response

On Holding AG has recently caught the attention of various analysts, leading to a series of upgrades following the release of strong financial results. Following a notable second-quarter performance, Piper Sandler designated an Overweight rating to the company, which observed a 29% increase in sales when measured in constant currency. Analysts express confidence in the company's prospects through 2024 and beyond.

Positive Market Sentiment

KeyBanc has echoed this enthusiasm, maintaining an Overweight rating driven by strong consumer demand and heightened brand visibility. Other firms, including TD Cowen, Truist Securities, Baird, and Goldman Sachs, have also increased their price targets, signaling optimism about On Holding's future performance.

Strong Financial Results and Technological Innovations

In their recent reports, On Holding showcased a 27.8% increase in net sales, totaling CHF 567.7 million, alongside a substantial rise in net income to CHF 30.8 million. These results were significantly bolstered by the introduction of innovative technologies, such as LightSpray, coupled with upcoming product launches like the Cloudboom Strike and Cloudsurfer Next.

Strategic Commitments and Future Projections

The management of On Holding has reiterated its commitment to driving EBIT growth moving into the second half of the fiscal year. This commitment aligns with a robust product pipeline, expected to enhance both direct-to-consumer endeavors and overall brand expansion. The company anticipates a minimum currency-adjusted sales growth of 30% and net sales reaching at least CHF 2.26 billion for the full year 2024, accompanied by a gross margin hovering around 60%.

Frequently Asked Questions

What is the new price target for On Holding AG shares set by Stifel?

Stifel has increased its price target for On Holding AG shares to $59 from the previous $45.

What factors contributed to Stifel’s optimistic outlook for On Holding?

Key factors include On Holding's strong sales momentum, expansion into new product categories, and favorable fiscal projections for the coming years.

How has On Holding AG performed compared to the S&P 500 this year?

On Holding AG shares have surged by 82.6% year-to-date, significantly outperforming the S&P 500, which has risen by 18.1%.

What financial milestones has On Holding reported recently?

On Holding reported a 27.8% increase in net sales to CHF 567.7 million and a rise in net income to CHF 30.8 million.

What future targets does On Holding have for revenue and growth?

The company aims for at least CHF 3.55 billion in revenue and an adjusted EBITDA margin of 18% or higher by fiscal year 2026.

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