On Holding's Strong Brand Momentum Gets The Likes Of This Analyst

  • Telsey Advisory Group analyst Cristina Fernández reiterated an Outperform rating on the shares of On Holdings AG ONON with a price target of $30.00.
  • The company noted it had seen a good holiday season so far in footwear with full-price sales. The recent 2-for-1 apparel promotion it ran online was limited and used as an activation to drive customers to the site and clear some out-of-season products.
  • Looking to 2023, Spring orders from wholesale accounts reflect continued strong growth supported by new product introductions in both performance and lifestyle and select expansion of wholesale accounts.
  • While the consumer environment is choppy, the analyst sees On as an outlier in the consumer space, given its fast growth and ability to maintain full-price selling. 
  • The company has a solid pipeline of product launches slated for 2023, including a new cushioning platform. 
  • Looking to next year, the analyst expects both the gross margin and EBITDA margin to expand Y/Y as On laps 300-350 basis points of pressure from higher air freight usage in 2022 and benefits from passing through price increases.
  • On has observed the consumer be more cautious in Europe than in the U.S.
  • The analyst said the company is taking a measured approach to growing its distribution in order to ensure the brand is showcased in a premium way.
  • The analyst expects gradual expansion with all three new wholesale partners, Dick's Sporting Goods Inc DKSFoot Locker, Inc.FL, and JD Sports Fashion PLC JDSPY JDDSF.
  • On has been expanding with JD Sports in the U.K. and is evaluating adding its assortment to Foot Locker stores, the analyst cited.
  • Price Action: ONON shares are trading higher by 0.67% at $18.03 on the last check Wednesday.
  • Photo Via Company
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