© Reuters. On Holding upgraded on attractive business model ‘supported by mega trends’
By Sam Boughedda
On Holding Ltd. (NYSE:) shares have been upgraded to Buy from Neutral, with its price target lowered to $28 from $37 per share by Goldman Sachs on Monday following its last week.
Analysts told investors in a note that the company has an attractive business model supported by megatrends.
“ On Holding reported 3Q22 adj EBITDA CHF 56.3mn, driven by net sales growth of +50% yoy. Group gross margins were 57.1%, -310bps yoy reflecting FX headwinds and continued (albeit reduced) airfreight headwinds. Adj. EBITDA margins came in at 17.2%, -20bps yoy. Inventory +95.6% yoy, driving net working capital +91% yoy. Net Cash at the end of 3Q22 was CHF 493mn, -25% yoy. By geography, 3Q22 European sales grew +32%, NA +57% and APAC +85% yoy,” wrote the analysts.
Commenting on the company’s guidance, the analysts said ONON now expects the use of airfreight to be at a more normalized level in Q4, given a “stronger inventory position.” However, it sees continued FX margin pressure.
They added that the firm expects “On’s strong product proposition centred on innovation to drive continued rapid growth and best-in-class gross margins,” while it is “set to benefit from structural tailwinds as Sportswear fashion market penetration rises.”
In addition, Goldman Sachs believes the company’s shift to DTC provides “strong margin tailwinds.”
Be the first to comment