Telsey Advisory Group (TAG) analysts have raised the price target for ON Holdings (ONON) from $40 to $47 following the announcement of Zendaya as the company's first global brand ambassador.
“The brand has signed a multi-year deal with an emphasis on movement and storytelling. Zendaya will also be contributing to the design process in future collections,” TAG said in a Friday note.
With 184 million Instagram followers, ON hopes Zendaya will help it reach a wider audience, especially younger women in their teens and twenties, complementing the company’s existing slightly older core audience.
The collaboration is expected to drive apparel sales, an area where Zendaya’s fashion influence can significantly impact awareness. In 2023, apparel sales represented just about 4% of ON's total sales.
“Overall, the announcement of Zendaya as On's first global ambassador is incrementally positive for the brand,” analysts noted.
“Together with the announcement on April 29 of singer-songwriter FKA Twigs as Creative Partner for On's new training vertical, it shows On is stepping up its marketing engine as it becomes a larger global brand and blurs the lines between performance and lifestyle.”
Looking ahead, Telsey sees a potential upside to ON's 2024 revenue growth guidance of 28% assuming “bigger brand moments” around sporting events and product launches in fiscal Q2 and Q3.