Raymond James adds On Holding stock on pullback, removes Deckers By Investing.com

Raymond James added On Holding (ONON) to its Analyst Current Favorites list and said the recent pullback creates an attractive entry point, while removing Deckers (DECK). The firm highlighted ONON’s 62.8% gross margin, 30% revenue growth, pricing power, and long-term growth drivers, valuing the stock at roughly 10x EV/EBITDA versus 21.4x currently. The article also notes leadership transition risks, but the overall stance remains constructive on ONON and positive on Deckers’ long-term story.

Analysis

The market is treating ONON like a governance dislocation, but the bigger setup is a margin-resilience trade: premium athletic brands with pricing power tend to absorb cost shocks better than the market expects, especially when distribution is still expanding and product mix is shifting upmarket. If management continuity under the founders stabilizes sentiment, the stock can re-rate before the next earnings print because the debate is less about next quarter’s demand and more about whether the brand can keep comping through a leadership transition.

The second-order beneficiary is not just ONON itself but the broader premium footwear channel: wholesale partners and retailers with exposure to high-velocity, high-margin launches should see less inventory risk than the market assumes if consumer demand remains intact. Conversely, brands that compete primarily on fashion cycles without a similar innovation premium may get squeezed as buyers rotate toward names with clearer product differentiation and stronger gross margin buffers.

The main risk is timing. In the near term, any additional founder/CEO headline can keep the multiple compressed even if fundamentals don’t change, and higher freight or energy costs can create a temporary optics problem in margin guidance. Over a 3-6 month horizon, the catalyst is not a heroic revenue surprise but a confirmation that full-price sell-through and channel health remain strong enough to support re-acceleration in EBITDA leverage.

Consensus may be underestimating how quickly a de-risked narrative can snap back into a growth multiple. If the market has already marked the stock down for governance, the incremental downside from a benign transition is limited, while upside from even modest multiple normalization is meaningful because the stock is still priced like a quality growth name with a credibility issue, not a broken business.

Key Decisions for Investors

• Go long ONON on weakness with a 3-6 month horizon; target a 20-30% re-rating if governance noise fades and gross margin stability is confirmed, with a stop if management commentary signals demand deceleration.
• Use call spreads in ONON rather than outright stock for the next earnings cycle; upside is tied to sentiment normalization, but short-dated volatility is likely to stay elevated around CEO-transition headlines.
• Pair long ONON / short a lower-margin athletic footwear peer or basket over the next 1-2 quarters; thesis is that premium brand power and better margin structure should outperform during a cost-inflation backdrop.
• Add exposure only after the next management update if co-CEO messaging emphasizes continuity and inventory discipline; that is the cleanest catalyst for multiple expansion without needing a revenue beat.