On Tuesday, Truist Securities adjusted its price target for On Holding AG (NYSE: ONON), a sportswear company, increasing it to $61.00 from the previous target of $58.00. The firm maintained a Buy rating on the stock. Despite the broader market downturn, with the S&P 500 experiencing a decline of approximately 1%, On Holding AG's shares fell around 2%. This decline came even as the company reported a solid beat and raise, which typically indicates strong financial performance and an optimistic future outlook.
The adjustment follows a period where On Holding AG has demonstrated significant resilience and growth. The company has witnessed robust demand trends across various regions, channels, and product categories. Analysts believe that growth is set to accelerate further in the fourth quarter of the year. Truist Securities attributes this positive momentum to increased brand recognition, spurred by factors such as the company's exposure during the Olympics and its partnership with celebrity Zendaya.
The analyst's commentary highlighted the success of On Holding AG's recent product launches, which have been well-received by consumers. These new products have contributed to the diversification of the company's assortment, reinforcing the analyst's confidence in the sustainability of the company's growth trends.
Truist Securities expressed optimism regarding On Holding AG's trajectory, despite the challenges posed by foreign exchange headwinds. The company's ability to outperform expectations and maintain strong demand across its portfolio suggests a durable pattern of growth that supports the revised price target of $61.00.
In other recent news, On Holdings AG reported record-breaking third-quarter results in 2024, with net sales reaching CHF 636 million, a 33% year-over-year increase. The company's Direct-to-Consumer (D2C) segment and APAC region, specifically China, saw significant growth, contributing to the overall sales increase. The Swiss footwear and apparel company also raised its full-year 2024 net sales growth expectation from 30% to 32%, projecting net sales of at least CHF 2.29 billion.
Brand awareness for On Holdings AG doubled in the U.S. and tripled in Paris, supported by strong Olympic presence and celebrity endorsements. The company achieved a gross profit margin of 60.6% and an adjusted EBITDA margin of 18.9%. Despite a decrease in wholesale store growth, the company sold over 1 million pairs of shoes in a single week, a first in its history.
These recent developments indicate a strong growth trajectory for On Holdings AG, driven by strategic marketing, product innovation, and a focus on direct-to-consumer sales. The company anticipates continued robust performance in Q4, driven by D2C strength and a strong brand presence. As part of its long-term strategy, On Holdings AG plans to maintain a gross profit margin above 60% and an adjusted EBITDA margin of 18% over the next two years, with investments focusing on innovation and sustainability.
InvestingPro Insights
On Holding AG's recent performance aligns with several key metrics and insights from InvestingPro. The company's revenue growth of 28.49% over the last twelve months as of Q2 2024 supports Truist Securities' optimism about accelerating growth. This is further reinforced by an InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
The company's gross profit margin of 59.97% is particularly noteworthy, with an InvestingPro Tip highlighting On Holding's impressive gross profit margins. This strong profitability metric underscores the company's ability to maintain pricing power and efficiency, even as it expands its product line and market presence.
On Holding's stock has shown remarkable performance, with a 95.95% price total return over the past year. This aligns with the InvestingPro Tip noting a high return over the last year and trading near its 52-week high. The stock's current price of $52.71 is close to the fair value of $54.96 based on analyst targets, suggesting that the market is recognizing the company's growth potential.
For investors seeking a deeper understanding of On Holding AG's financial health and market position, InvestingPro offers 21 additional tips, providing a comprehensive analysis to inform investment decisions.
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