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After On Holding reported its November results, we updated our fair value and started tracking several new factors. We added the company’s entry into football and its first billion dollar share buyback program to the core drivers we monitor. We also added the potential for one-off tax refunds to distort profit figures, after a large import duty refund occurred this quarter. Finally, we reset our growth assumptions for clothing sales and direct-to-consumer revenue after both grew faster than the footwear business.
KeyBanc established a price target of $42 for the Swiss footwear brand. This follows the company's latest earnings report, which showed record sales and high profit margins as it continues to win customers from larger rivals. The new target is slightly below the average analyst target of $44, but it is still well above where the stock is currently trading.
Source: KeyBanc
On Holding reported a strong third quarter, bringing in about 1.11 billion dollars in sales. This was the first time the company crossed the 900 million Swiss franc mark in a single quarter. Profits were also much higher than analysts expected, coming in at 66 cents per share compared to the 47 cents that was predicted.
The most important detail for long-term owners is that the company is selling more through its own website and stores rather than through other retailers. These direct sales grew 25 percent and now make up over 42 percent of the business. This shift helped the company reach its highest gross margin ever, which is the profit left after paying for the materials and making the shoes. As long as On can keep this premium status and avoid the discounts that hurt other brands, it can continue to fund its expansion into apparel and new markets like China.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
BTIG set a price target of $60 for the stock, which is significantly higher than the current average analyst target of $43. The firm kept its buy rating ahead of the company's quarterly results next week. This suggests high expectations for the brand's ability to continue winning market share while keeping its premium pricing intact.
Source: BTIG
The company is expected to report revenue of about 1.1 billion dollars. This update will be an important check on whether the brand is still winning customers in the US and China without relying on the heavy discounts that have hurt larger rivals. We will also be looking for progress in its apparel business, which the company is trying to turn into a major second source of sales alongside its running shoes.
Management consistently sets targets they can beat, and the business is currently outrunning even their most optimistic forecasts. This record of seven beats in eight quarters shows they have a tight grip on their growth pace.
| Expectation | |
|---|---|
| EPS | $0.37 |
| Revenue | $1.08B |