Although On Holding AG (NYSE:ONON) is well positioned to gain share in the global sportswear market, estimated at $410 billion, there are concerns around the company’s long-term growth and margin aspirations, given “execution risk to achieving scale and subpar levels of marketing investment,” according to BofA Securities.
The On Holding Analyst: David Roux initiated coverage of On Holding with an Underperform rating and a price target of $16.
The On Holding Thesis: The consensus estimate for the company’s 2022-2026 revenue growth of 34% implies double the growth of HOKA and reaching almost 50% of the size of Under Armour and 75% of ASICS in five years, Roux said in the initiation note.
“Achieving this scale requires significant category expansion (94 footwear SKUs today) and greater brand recognition – both subject to execution risk and not supported by current levels of marketing spend in our view,” the analyst wrote.
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“We estimate a 31% revenue CAGR over 2022-26E – 4pts below consensus, while our growth rate in 2026E is 10ppt below,” he added.
ONON Price Action: Shares of On Holding had declined by 8.61% to $20.59 at the time of publication Monday, according to Benzinga Pro.
Photo: Courtesy of on-running.com
