On Holding is the IBD Stock Of The Day for Wednesday as shares rallied to test a buy point. Meanwhile, group peer Birkenstock is trading in a buy zone.
The Swiss shoemaker on Aug. 13 posted adjusted earnings of 16 cents per share, short of FactSet views for 19 cents. Revenue leapt 29% to a record $653.8 million, ending a string of five quarters of decelerating sales growth. Analysts expected $646.8 million in sales.
On Holding maintained its full-year forecast for at least 30% net sales growth on a constant currency basis. That implies net sales of at least 2.26 billion Swiss Francs, about $2.65 billion. The revenue outlook was just shy of FactSet estimates for $2.66 billion.
The company expects a gross profit margin of around 60% for 2024 with an adjusted EBITDA margin of 16% to 16.5%.
Following results, Wedbush analyst Tom Nikic noted it was the first time that On Holding did not raise its guidance since going public in 2021, The Fly reported. Still, the firm is bullish about On's "industry-leading" revenue growth, expectations to resume acceleration in the second half of 2024, strong full-price sales trends and lean inventories. Meanwhile, company trends remain strong, with direct-to-consumer sales up 30% in Q2 while wholesale revenue leapt 29%. Wedbush raised its On Holding stock price target to 48 from 42 and maintained a buy rating.
A number of firms also raised their price targets for ONON shares slightly following results. Baird pointed to On's "innovation-led culture" while Morgan Stanley says the company continues to display underlying business momentum with evidence of best-in-class brand management.
On Holding was also the designer for the Swiss Olympic Team at the Paris 2024 Olympics. Sixty-five athletes at the Games were sponsored by On, according to local outlet SWI swissinfo. Kenyan runner Hellen Obiri won the bronze medal in the Women's Marathon while wearing On's new Cloudboom Strike LS. The Cloudboom Strike LS features a LightSpray upper, which is created by a robotic arm spraying material to form a sock-like mold without laces. On claims that the shoe's thin, seamless, one-piece upper makes it its lightest-ever running shoe.
Elsewhere, top-seeded Polish tennis star Iga Swiatek won an Olympic bronze medal in Women's Singles while wearing On's The Roger tennis shoes, named after company partner and tennis legend Roger Federer. Swiatek, a five-time Grand Slam winner, is working with On Holding to create a custom shoe, Tennis.com reported in August 2023.
On Holding Stock
ONON stock surged 2.5% Wednesday to trade below a 43.20 handle buy point in a cup base. Shares briefly cleared the entry intraday.
The stock is on track for their third consecutive week of gains, MarketSurge charts show. However, the stock has seen volatile swings since mid-June.
ONON stock rallied more than 62% this year through Tuesday.
On Holding has a 93 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have an 81 EPS Rating. On's relative strength line is trending back to mid-June highs with a 92 RS Rating.
Meanwhile, group peer Birkenstock is trading in a buy zone for a flat base. BIRK shares cleared the 61.83 buy point on Aug. 15.
The sandal maker reports Q3 results on Aug. 29. FactSet expects earnings to increase nearly 24% to 57 cents per share on 21.5% revenue growth to $628 million.
Birkenstock bolted nearly 29% in 2024 and hit a record high of 63.83 on Aug. 16.
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