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BMO Capital raised its price target for the Swiss shoemaker to $33 from $28, though it kept its rating at Market Perform. This means the firm expects the stock to perform roughly in line with the broader market rather than beating it. The move follows the company's announcement of a new share buyback and updated growth targets earlier in the week. While the higher target reflects a more positive outlook on the company's expansion, BMO's neutral rating suggests they are waiting for more proof that the brand can maintain its high profit margins as it moves into more mainstream markets.
Source: BMO Capital
On Holding announced a plan to buy back up to $1 billion of its own shares over the next three years. A buyback is when a company uses its cash to purchase its own stock from the market, which reduces the total number of shares and makes each remaining share own a larger piece of the business.
This move shows management is confident that the company will generate plenty of extra cash even as it spends heavily to grow. Alongside the buyback, the company set new long-term goals that rely on expanding beyond running shoes into general apparel and new sports categories. For a brand that has thrived by staying premium and avoiding discounts, this plan suggests they believe they can reach a much larger audience without losing their high-end appeal.
Source: Reuters
On is moving into football, the world's most popular sport, by partnering with stars Kylian Mbappé and Thierry Henry. This marks a major shift for a company that has built its name almost entirely on high-end running shoes.
Expanding into new sports is a key part of the company's plan to grow from a niche label into a broad athletic brand. By moving into football, On is going directly after the much larger customer bases of giants like Nike and Adidas. While the stock has struggled this year, these high-profile deals show the company is willing to spend its profits to win over a more mainstream global audience.
US retail sales grew more than expected in August as back-to-school shopping helped offset higher gas prices. Spending rose in twelve out of thirteen categories, showing that consumers are still willing to open their wallets for new gear.
This is a helpful backdrop for On Holding, which sells premium running shoes and clothes. Since the company is trying to grow its US business and sell more directly to customers through its own website and stores, a healthy and active American shopper is exactly what it needs to keep its growth on track.
Source: Bloomberg Markets and Finance
Guggenheim analysts lowered their price target for On Holding to $42, down from a previous target of $51. Even with the lower target, the firm still expects the stock to rise significantly from its current price of about $27. This move brings Guggenheim closer to the average analyst target of $42. While the lower target reflects a more cautious view on the stock's price in the short term, it does not change the core story of a brand that is still growing its sales and winning new customers.
Source: Guggenheim
Management has built a reliable habit of clearing their own bars, with five straight beats showing they have a firm handle on their rapid global expansion.
| Expectation | |
|---|---|
| EPS | $0.47 |
| Revenue | $1.12B |