Bulletin
Investor Alert

The Ratings Game Archives | Email alerts

Oct. 12, 2021, 2:51 p.m. EDT

Newly public On Holding is following in New Balance’s footsteps, in Baird’s view

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    On Holding AG (ONON)
  • X
    Nike Inc. Cl B (NKE)
  • X
    lululemon athletica inc. (LULU)

or Cancel Already have a watchlist? Log In

Tonya Garcia

On Holding AG is following a path carved out by New Balance, according to Baird analyst Jonathan R. Komp, which initiated the newly public athletic-gear company at outperform with a $38 price target.

“At an early stage On has demonstrated impressive appeal across geographies/channels/categories,” according to the Baird analyst, suggesting an “addressable market” of some $300 billion and “perhaps long-term opportunity to follow closer in the footsteps of New Balance,” a private brand with some $4 billion and an ambition to reach $7 billion to $10 billion than in the footsteps of primarily running brands, “which have topped out much earlier.”

In the Baird note, published Monday, Komp wrote that On enjoys “broad appeal” and is “uniquely positioned” thanks to the company’s origins. On /zigman2/quotes/229331620/composite ONON -4.95% was founded by Olivier Bernhard, an endurance athlete, and the company’s innovations are focused on performance.

See: Swiss running-shoe maker On sets its sights on the premium market — with help from a tennis giant

After having profitably seen revenue rise at a compound annual growth rate of greater than 0% since its inception, On has, in the Baird view, “further opportunity for market-share gains, direct-to-consumer expansion and category extensions.”

JPMorgan initiated On at an overweight rating with a $37 share-price target.

“On operates in an attractive industry with substantial barriers to entry and high growth prospects underpinned by health and casualisation tailwinds,” analysts wrote.

“Importantly, we believe On is striking a balance between its performance roots (crucial for credibility in the sportswear space) and lifestyle (paramount for growth).”

The JPMorgan team observed in the research note that supply-chain problems in Vietnam have been taken into account in their analysis of On. For the six months ending in June, all of On’s shoes were made in that country.

Also: Walmart, Target, Home Depot and other large retailers are chartering ships to bypass supply chain problems. Will the strategy save Christmas?

“While the situation remains fluid, we expect any impact to be transitory and solely driven by supply,” JPMorgan said.

“Underlying demand for the brand instead remains strong, and hence we would look to be opportunistic on any near-term supply-chain-driven weakness. Longer term, we note On’s premium-price positioning and strong pricing power as on offset to broader inflationary pressures.”

Stifel rates On Holding a buy with a $36 share-price target.

“We expect word of mouth, growing awareness, new offerings, and select new distribution [to] help recruit new loyal consumers to the brand to fuel strong growth in 2022 [and afterward],” wrote analysts led by Jim Duffy.

Stifel puts On in a similar category to Nike Inc. /zigman2/quotes/203439053/composite NKE -0.37% , Lululemon Athletica Inc. /zigman2/quotes/204011506/composite LULU -1.91% and VFC Corp.’s /zigman2/quotes/206706147/composite VFC -2.71% North Face, anticipating overlap among these brands.

Don’t miss: Canada Goose shoe collection is coming in November

IPO Report: A bunch of fitness companies have jumped into the IPO market this year. It’s not working out.

On began trading on the New York Stock Exchange on Sept. 15 , on the heels of an IPO priced at $24 per share. The stock closed Monday at more than $30.

Dutch Bros. Inc. /zigman2/quotes/229331563/composite BROS -0.06% also opened for trading that day on the NYSE.

The Renaissance IPO ETF /zigman2/quotes/207665280/composite IPO -2.70% has slipped 0.5% to date in 2021, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -1.90% is up 16.1% on the year.

/zigman2/quotes/229331620/composite
US : U.S.: NYSE
$ 40.16
-2.09 -4.95%
Volume: 2.15M
Nov. 30, 2021 4:00p
P/E Ratio
1,202
Dividend Yield
N/A
Market Cap
$13.11 billion
Rev. per Employee
$609,018
loading...
/zigman2/quotes/203439053/composite
US : U.S.: NYSE
$ 169.24
-0.63 -0.37%
Volume: 11.03M
Nov. 30, 2021 4:00p
P/E Ratio
44.95
Dividend Yield
0.72%
Market Cap
$268.87 billion
Rev. per Employee
$606,999
loading...
/zigman2/quotes/204011506/composite
US : U.S.: Nasdaq
$ 454.41
-8.85 -1.91%
Volume: 1.27M
Nov. 30, 2021 4:00p
P/E Ratio
71.93
Dividend Yield
N/A
Market Cap
$60.14 billion
Rev. per Employee
$176,075
loading...
/zigman2/quotes/206706147/composite
US : U.S.: NYSE
$ 71.73
-2.00 -2.71%
Volume: 4.36M
Nov. 30, 2021 4:00p
P/E Ratio
23.05
Dividend Yield
2.79%
Market Cap
$28.96 billion
Rev. per Employee
$230,906
loading...
/zigman2/quotes/229331563/composite
US : U.S.: NYSE
$ 52.84
-0.03 -0.06%
Volume: 2.70M
Nov. 30, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.65 billion
Rev. per Employee
$53,238
loading...
/zigman2/quotes/207665280/composite
US : U.S.: NYSE Arca
$ 63.04
-1.75 -2.70%
Volume: 171,376
Nov. 30, 2021 4:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,567.00
-88.27 -1.90%
Volume: 4.07B
Nov. 30, 2021 4:57p
loading...

Get news alerts on On Holding AG — or create your own.
This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.