- Telsey Advisory Group analyst Cristina Fernández reiterated an Outperform rating on the shares of On Holding AG ONON with a price target of $30.00.
- The analyst projects inline 4Q22 sales growth of 43% to CHF 273 million, reflecting demand for ONON products, good inventory availability and new product launches.
- The analyst forecasts the gross margin to expand ~80 bps to 59.3% versus the FactSet (FS) consensus of 58.3%, reflecting pricing actions and lower freight costs, partially offset by negative FX and a lower share of DTC sales.
- The analyst expects ONON to exceed its 2022 targets of CHF 1.125 billion in sales and CHF 148 million in EBITDA.
- Despite a promotional holiday season, On's strong brand momentum remains unchanged, with higher brand awareness driven by new product introductions and an expanded presence at wholesale partners, added the analyst.
- The more challenging part of the business is apparel, which is not performing as planned, and On is adjusting styles and the product presentation to improve performance, the analyst commented.
- The analyst anticipates a lot of focus next week to be on the 2023 guidance and expects On to balance its positive outlook for the business with a bit of caution given an uncertain macro environment and FX volatility.
- While the consumer environment is choppy, the analyst adds that On has a solid pipeline of product launches in 2023 to drive growth. The analyst also expects the gross and EBITDA margins to expand Y/Y.
- Price Action: ONON shares are trading higher by 6.08% at $21.80 on the last check Thursday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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