Updated Aug 11 at 10:32am ET.
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On Holding reported about $1.05 billion in sales for the quarter, which was lower than the $1.09 billion analysts expected. While earnings per share of $0.44 came in slightly ahead of estimates, the company lowered its sales outlook for the full year. Management noted that a tougher environment for shoppers and the impact of U.S. tariffs, taxes on imported goods, are weighing on the business.
The stock fell about 21 percent on the news. For a high-growth brand, even a small slowdown in sales can cause a large drop in the stock price because investors pay a premium for fast expansion. The company is choosing to stay disciplined on prices rather than using discounts to drive volume, which helps protect its luxury image but means it will likely grow more slowly in the near term.
UBS maintained its buy rating and set a price target of 82 dollars. This is much higher than the average analyst target of about 54 dollars and more than double where the stock is currently trading.
This high target suggests a lot of confidence that the brand can keep its premium status while growing. If the company continues to sell more through its own website and stores rather than through other retailers, it can keep more of every dollar it makes. This shift is a big part of why some analysts see much more value here than the current stock price reflects.
Source: UBS
Analysts have kept a steady stream of positive ratings on the stock throughout the year. Most experts rate it a buy, and the average target price of $54 suggests the stock could rise 77% from its current level.
The company has a strong habit of beating expectations, clearing the bar in six of the last eight quarters. This suggests management is disciplined about setting targets they can actually hit.
| Expectation | |
|---|---|
| EPS | $0.42 |
| Revenue | $1.09B |