On Tuesday, Stifel, a financial services company, updated its outlook on On Holding AG (NYSE:ONON), a player in the global sports footwear and apparel market. The firm increased its price target on the company’s shares to $41 from the previous $40 while reiterating a Buy rating.
The adjustment comes after On Holding reported first-quarter 2024 revenue of CHF 508.2 million and adjusted EBITDA of CHF 77.4 million. These figures surpassed both Stifel’s expectations, which were set at CHF 494.9 million for revenue and CHF 74.4 million for adjusted EBITDA, and the consensus estimates of CHF 497.4 million and CHF 74.4 million, respectively.
Stifel noted the company's raised guidance for the full year 2024, which includes an increase of CHF 40 million in revenue and CHF 6.5 million in adjusted EBITDA at the midpoint. This revised forecast is attributed to easing foreign exchange pressures. The firm also highlighted On Holding’s direct-to-consumer (DTC) momentum, which saw a 48.7% growth in constant currency during the first quarter, and the strong order visibility for the second half of the year.
Moreover, Stifel pointed to the significant reduction in inventory levels, down 21% year-over-year, which lessens the risk of future markdowns and supports the potential for gross margin improvement. The diversified marketing strategies of On Holding are expected to expand the total addressable market within lifestyle-oriented pursuits, within the context of a $395.5 billion global sports footwear and apparel market.
InvestingPro Insights
Following Stifel's optimistic update on On Holding AG (NYSE:ONON), a closer look at the company's financial health through InvestingPro data reveals several key metrics that could be of interest to investors. The company boasts a robust market capitalization of approximately $9.78 billion USD, reflecting its significant presence in the sports apparel industry. With a substantial revenue growth of 46.64% in the last twelve months as of Q1 2023, On Holding's financial trajectory appears to be on an upward trend. Additionally, the company's gross profit margin stands at an impressive 59.56%, indicating efficient cost management and a strong pricing strategy.
InvestingPro Tips suggest that On Holding's net income and sales are expected to grow this year, which aligns with Stifel's positive outlook and the company's own raised guidance for 2024. The company's impressive gross profit margins further validate the financial firm's confidence in the stock. On the other hand, investors should be aware that the stock has experienced significant volatility recently, with a price total return of -9.76% over the last week. Nevertheless, the company's strong fundamentals may offer a cushion against short-term market fluctuations.
For those interested in delving deeper into On Holding's financials and future prospects, InvestingPro offers additional insights and tips. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a wealth of data and analysis to inform investment decisions. Currently, there are 15 additional InvestingPro Tips available for On Holding, which can be explored for a more comprehensive understanding of the company's potential.
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