On Holding's Brand Momentum Continues Into 2023, Says Analyst

Telsey Advisory Group analyst Cristina Fernández reiterated an Outperform rating on the shares of On Holding AG ONON and raised the price target from $30 to $33.
On widely beat 4Q22 expectations and its own guidance, showing that the brand is reaching a wider consumer base and new product introductions are helping it to have a stronger presence at retail and attract consumers to its website and stores, said the analyst.
While Cloud 5 remains a bestseller, its reliance on its original model is decreasing and "existing products" like Cloud 5 accounted for 35% of sales growth in 4Q22, while new products drove 65% of the growth, the analyst specified.
The new products—led by Cloudgo, Cloudmonster, and Cloudrunner amplify On's performance running range and continue to cement On as a performance brand.
Looking to 2023, the momentum has not slowed in 1Q23, with YoY growth expected at 61%, and the company's guidance for 2H23 embedding some conservatism despite strong Fall/Winter order books, said the analyst.
The analyst is impressed by the magnitude of the 4Q22 beat and pleased to hear about the healthy order book from wholesale accounts continuing in 1H23.
On has a solid pipeline of product launches slated for 2023 and also laps the higher air freight usage last year, leading to more of the top line falling to the bottom line and putting the company on the path to hit its 2024 EBITDA margin goal of 16%, said the analyst.
The analyst noted the company's 2023 sales guidance of CHF 1.7B indicates On plans to reach its 2024 sales goal a year earlier.
Also Read: On Holding Gets Price Target Bumps By Analysts After Q4 Results
Price Action: ONON shares are trading higher by 2.31% at $27.89 on the last check Wednesday.

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