On Holding Posts Record High Q4 Margins, Analyst Praises Gen Z's 'Sneaker Of Choice'

Shares of On Holding AG ONON were rising in early trading on Tuesday, after the company reported strong fourth-quarter sales growth.

Here are some key analyst takeaways.

• Telsey Advisory Group analyst Cristina Fernández maintained an Outperform rating and price target of $67.
• Needham analyst Tom Nikic reaffirmed a Buy rating and price target of $67.

Check out other analyst stock ratings.

Telsey Advisory Group: The company ended 2024 on a strong note. All metrics came in slightly above expectations. The company expects its revenue growth in 2025 to be frontend-loaded, Fernández said in the note. The company's fourth-quarter sales growth of 36% came in higher than consensus of 33%. Gross margins surged to a record high of 62.1%, she added.

While management's 2025 revenue and gross margin guidance came in slightly short of expectations, the company "tends to provide guidance it can exceed," the analyst stated.

"In addition, On commented 2025 is off to a good start and given the timing of product launches, such as Cloud 6 in February, expects 1H25 revenue growth to be higher than in 2H25," she further wrote.

Needham: With strong product innovation in 2024, On Holding is gearing up for a slew of product launches in 2025. This could drive sales, Nikic said. The company's brand awareness has grown, he added.

On Holding has "increasingly become a sneaker of choice for Gen Z consumers," he added.

Although the EMEA (Europe, the Middle East and Africa) region grew sluggishly through most of 2024, sales growth here accelerated from 15% in the third quarter to 33% in the fourth quarter, the analyst stated. "ONON remains one of the highest-momentum names in our coverage, and we remain bullish based on growing brand awareness, distribution expansion (both in DTC and wholesale), a strong margin profile, and a cash-rich balance sheet," he further wrote.

ONON Price Action: Shares of On Holding had risen by3.26% to $49.41 at the time of publication on Tuesday.

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