Federer-Backed On’s Investor Day Doesn’t Sway Bearish Analyst
(Bloomberg) — On Holding AG’s upbeat investor day didn’t sway Jefferies from its bearish view that many of the athletic brand’s big goals aren’t feasible due to the narrow focus of its business.
Analysts led by Randy Konik say the Zurich, Switzerland-based company’s long-term guidance is too ambitious given its market position and most recent earnings. In the second quarter, sales in the key Americas region grew just 4.5%, missing the average analyst estimate, according to data compiled by Bloomberg. In order to reach its 2029 target, On’s sales would have to accelerate sharply from a slowing base, which Jefferies sees as unlikely.
“This is a niche brand that’s going to stay niche,” Konik said in an interview. The total addressable market for the company is “limited,” he adds, noting challenges like the lofty cost of its products. The company says the average price for its shoes has risen to $170 from $145 in five years.
On strives to be a premium running shoe and clothing brand at a time when consumers are dealing with high inflation that’s led competitors in the athletic space to discount prices to lure customers. That’s translated to weakness in shares of On, Nike Inc. and Adidas AG, which have all slumped so far this year, underperforming the broader S&P 500 Index’s 13% gain.
Jefferies rates On shares underperform, one of only two sell-equivalent ratings among analysts tracked by Bloomberg, which includes 28 buys and 4 holds. The firm’s $20 price target is the lowest on the Street, and more than 30% below where On’s stock traded at Thursday’s close. On, which began trading publicly in 2021, has seen shares fall 34% so far this year, on track for the weakest performance since 2022, and is more than 50% below its 2025 record.
During its investor event on Tuesday, On set a goal for net sales to reach 5.6 billion Swiss francs by 2029 ($6.8 billion), an adjusted EBITDA margin of at least 22% and gross profit margin of at least 65% through the period.
“We just don’t see it working,” Konik said, noting a more challenging backdrop. He added that On also faces well-established competitors with larger reaches, even if there’s weakness across the sector.
“Nike and Adidas sell to everyone, have heritage and credibility,” Konik said. “People buy from them for fashion and performance and they sell at every price point. They’re ubiquitous.”
Backed by tennis Hall of Famer Roger Federer, On has signed French superstar Kylian Mbappe to lead a push into football, and plans to launch golf gear in 2027. But Konik notes that it will take time for these new business areas to grow since it doesn’t have a history in these sports.
On is largely a “one-look pony” fashion product, which creates risk as styles can change at any time, Konik adds. The company also lacks a business in kids gear, which puts it at a disadvantage, Konik said.
To be sure, investors largely cheered On’s outlook and aim to continue to grow without compromising its premium; the stock is up 12% in the last four sessions, on track for its best weekly performance since November. The company also announced a share-buyback program, with plans to repurchase as much as $1 billion of its Class A shares through the end of 2029.
Still, Konik notes that expansion into new categories is difficult and the company has set a high bar.
“They told a good story, but they don’t really prove anything out,” he said.
Here are other notable analyst calls and commentary this week:
HSBC analyst Joseph Thomas upgraded Dollar General Inc. to buy citing the discount retailer’s strong sales recovery. JPMorgan’s Samik Chatterjee raised his recommendation for CoreWeave Inc. to overweight as he sees the AI infrastructure company benefiting from strong pricing. Lowe’s Inc. was downgraded to hold by Chuck Grom at Gordon Haskett on weak consumer spending intent data. Ciena Corp. was upgraded to outperform by Amit Daryanani at Evercore ISI on data center demand for optical networking equipment. ©2026 Bloomberg L.P.
