ONON: Margin Gains And Execution Will Boost Future Performance Despite Sector Headwinds

Analysts have slightly reduced their average price target for On Holding by about $1 to approximately $61. Strong third quarter performance and ongoing margin improvements are balanced by cautious valuation adjustments and heightened competitive risks in the sector.

Analyst Commentary

Recent research notes reflect a balanced stance among analysts following On Holding’s third quarter results, drawing both positive and cautionary observations related to growth trajectory, margins, and competitive landscape.

• Bullish analysts point to robust third quarter performance, highlighting both revenue growth and margin expansion as signs of operational momentum.
• There is optimism over On Holding’s ability to raise guidance for the full year, with particular confidence in continued strength across international regions and the Americas.
• Management’s execution of a stacked product launch calendar and the lack of consumer pushback on price increases signal confidence in future demand and pricing power.
• Some raise their price targets, citing improved outlook for margins and the company’s positioning as a “winner” in a challenging discretionary spending environment.

• Bearish analysts are paring back price targets to reflect elevated valuation and rising sector competition, even as they acknowledge strong fundamentals.
• Several caution that On Holding is now trading at a premium to mid-cap peers, which heightens downside risk amid shifting market conditions.
• Concerns persist about slowing growth potential if the company expands into team sports, an arena dominated by established leaders. This increases On Holding’s risk profile.
• The broader sporting goods sector is experiencing valuation adjustments. This may continue to impact On Holding irrespective of its company-specific performance.

What's in the News

• On Holding AG has raised its earnings guidance for the full year 2025. The company now projects net sales to grow by 34% year-over-year on a constant currency basis, an increase from the previous expectation of at least 31% (Key Developments).
• At current spot rates, reported net sales are now forecasted to reach CHF 2.98 billion, revised from the prior guidance of CHF 2.91 billion (Key Developments).

Valuation Changes

• Fair Value Estimate has decreased slightly, from $62.29 to $61.29, reflecting a modest downward adjustment.
• Discount Rate has risen marginally, moving from 8.02% to 8.19%.
• Revenue Growth projections have edged down slightly, from 22.19% to 22.10% year-over-year.
• Net Profit Margin has improved, increasing from 10.95% to 11.90%.
• Future P/E Ratio has declined from 39.39x to 35.04x. This suggests expectations for more moderate future earnings multiples.