On Wednesday, Williams Trading adjusted its stance on On Holding AG (NYSE:ONON) shares, shifting from a Hold rating to Buy. Accompanying this upgrade, the firm also increased its price target from $40.00 to $60.00. This change follows the company's third-quarter results for 2024 and an upward revision of its full-year 2024 guidance.
The analyst at Williams Trading cited several reasons for the optimistic outlook. On Holding AG's third-quarter performance outpaced both the consensus and the firm's own revenue, gross margin, and selling, general, and administrative expense (SG&A) projections. However, the company's earnings per share (EPS) fell short of expectations due to foreign exchange headwinds, which were more severe than anticipated.
Despite the EPS miss, the analyst highlighted On Holding AG's healthy inventory levels and a strategic shift toward a pull model—a method that relies on consumer demand to drive production and inventory restocking. This approach is seen as a positive development by the analyst, who had expressed concerns just the previous week about the company's direction.
The upgrade and price target increase reflect a renewed confidence in On Holding AG's business strategy and market position. The company's management has effectively distanced the firm from the risks that were a cause for concern, according to the analyst's evaluation.
Investors may take note of Williams Trading's updated perspective on On Holding AG as the market responds to the company's latest financial results and strategic initiatives. The raised price target to $60 from $40 signifies a substantial increase in the firm's valuation of On Holding AG's stock.
In other recent news, On Holding AG reported a remarkable third-quarter performance, with net sales soaring to CHF 636 million, marking a 33% year-over-year increase. This robust growth was primarily driven by strong demand across various regions, particularly in the APAC region and the Direct-to-Consumer (D2C) segment. Consequently, the company raised its full-year 2024 net sales growth expectation from 30% to 32%, projecting net sales of at least CHF 2.29 billion.
Several financial firms have updated their outlook on On Holding AG following these recent developments. Telsey Advisory Group raised its price target on On Holding AG shares to $62, while Goldman Sachs increased its target to $57, both maintaining a Buy rating.
BTIG upgraded On Holding AG stock from Neutral to Buy, setting a price target of $64.00, and Truist Securities adjusted its price target to $61.00, citing strong demand and growth acceleration.
On Holding AG also reported a gross margin of 60.6% and an EBITDA margin of 18.9% for the third quarter. These figures not only exceeded the quarter's expectations but also surpassed On's profit targets set for 2026.
The company is poised to continue its brand momentum through various strategic initiatives, including launching new products, opening new stores, and continuing aggressive marketing campaigns. These are all part of the recent developments indicating a strong growth trajectory for On Holding AG.
InvestingPro Insights
On Holding AG's (NYSE:ONON) recent upgrade by Williams Trading aligns with several positive indicators from InvestingPro data. The company's impressive revenue growth of 32.32% in Q3 2024 supports the analyst's optimistic view on its performance. Additionally, On Holding's gross profit margin of 60.18% for the last twelve months ending Q3 2024 underscores its strong market position, which is reflected in the InvestingPro Tip highlighting "impressive gross profit margins."
The company's financial health is further emphasized by another InvestingPro Tip stating that On Holding "holds more cash than debt on its balance sheet," which could provide flexibility for future growth initiatives. This solid financial footing is particularly relevant given the company's strategic shift towards a pull model, as mentioned in the article.
Investors should note that On Holding is trading near its 52-week high, with a significant 98.12% price return over the past year. While this indicates strong market confidence, it also results in a high P/E ratio of 117.87, suggesting the stock may be priced for high growth expectations.
For those seeking a more comprehensive analysis, InvestingPro offers 19 additional tips on On Holding, providing a deeper understanding of the company's financial position and market performance.
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