On Tuesday, Piper Sandler maintained its positive stance on On Holding AG (NYSE:ONON), reiterating an Overweight rating with a $39.00 stock price target. The firm highlighted the brand's growing popularity, particularly among upper-income (UI) teens, according to recent surveys. On Running, known for its performance footwear, has shown significant gains in brand preference and market share among this demographic.
On Running now ranks as the ninth overall favorite footwear brand, having moved up from twelfth place last spring, marking a year-over-year increase of 50 basis points in mindshare. This progression demonstrates the brand's growing appeal and competitive edge, even outpacing HOKA by 50 basis points in overall favorite footwear brand mindshare.
In the athletic footwear category, On Running has successfully maintained its position as the fifth favorite brand among UI teens. This represents a sequential gain of 20 basis points and a substantial year-over-year increase of 120 basis points. The brand's strategic positioning and marketing efforts seem to resonate well with this consumer segment, which is often seen as a trendsetter in the footwear industry.
The brand's performance is particularly strong among UI female teens, where On Running continues to hold the fourth spot as the favorite athletic footwear brand. The company has also seen impressive growth among UI male teens, climbing to the fourth position from eighth in the fall, with a significant sequential gain of 115 basis points in share.
On Running's appeal is not limited to the upper-income segment; it has also advanced in popularity among average-income (AI) teens. The brand moved up to the fifth favorite athletic footwear brand from sixth in the fall among this group, indicating a broader appeal and growing market presence.
InvestingPro Insights
As On Holding AG (NYSE:ONON) continues to sprint ahead in the competitive race of the athletic footwear market, its financial metrics reveal a robust fiscal physique. With a Market Cap of $10.38B and a striking Revenue Growth over the last twelve months as of Q4 2023 at 46.64%, the brand is not just capturing the hearts of upper-income teens but also the attention of investors.
The Gross Profit Margin during the same period stands at an impressive 59.56%, underscoring the company's ability to maintain profitability amidst expansion.
However, it is worth noting that On Holding AG is trading at a high P/E Ratio, currently at 125.64, which suggests a premium market valuation. This is further highlighted by a Price / Book ratio of 8.6, indicating that investors are willing to pay a higher price for each dollar of book value.
An "InvestingPro Tip" points out that despite this high valuation, analysts predict the company will be profitable this year, which may justify the optimistic pricing to some extent. Additionally, the stock has experienced a large price uptick over the last six months, with a 29.25% total return, reflecting the market's bullish sentiment towards the brand's growth trajectory.
For those considering an investment in On Holding AG, it is recommended to explore the full spectrum of "InvestingPro Tips" available, which include 6 more insights on the company's financial health and market performance.
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