Bernstein reiterates Outperform rating on On Holding stock, citing sustainable growth

Bernstein SocGen Group reiterated an Outperform rating and $70.00 price target on On Holding AG (ONON), citing management's sustainable growth plans through 2030, expansion across segments, and the company's potential as a long-term global sportswear compounder. This bullish outlook comes despite ONON's recent Q2 2025 earnings significantly missing forecasts, reporting an EPS of -0.12 against a projected 0.28 and revenue of CHF 749.2 million versus an anticipated CHF 816.29 million. Paradoxically, the stock increased following the earnings release, suggesting investor focus remains on the company's long-term growth trajectory over immediate financial performance.

Analysis

A significant divergence exists between On Holding AG's (ONON) recent financial performance and the market's long-term growth expectations, as highlighted by Bernstein SocGen Group's reiterated Outperform rating and $70.00 price target. The bullish case rests on management's strategy for sustainable growth through 2030, driven by expansion into lifestyle and apparel, underpenetrated geographies like Europe and Asia-Pacific, and a growing direct-to-consumer channel. Bernstein considers the company the "strongest long-term growth compounder in Global Sportswear" and views its 2026 targets, which require less than 20% sales growth, as "easily achievable." However, this optimism is directly contrasted by the company's Q2 2025 results, which substantially missed expectations with an earnings per share (EPS) of -0.12 against a forecast of 0.28 and revenue of CHF 749.2 million versus an anticipated CHF 816.29 million. Paradoxically, the stock price increased following this announcement, suggesting investors are currently weighing the long-term strategic narrative and premium brand positioning more heavily than the immediate execution shortfall.

Key Decisions for Investors

• Investors bullish on the long-term growth narrative may consider the current valuation a compelling entry point, aligning with Bernstein's view that near-term targets are achievable and significant upside exists to their $70 price target.
• The significant Q2 2025 earnings and revenue miss introduces considerable execution risk; therefore, cautious investors should closely monitor the next few earnings reports for a tangible return to revenue growth and margin improvement before committing new capital.
• Key performance indicators to watch are the growth rate of the direct-to-consumer segment and full-price sell-through metrics, as these are critical to validating the company's premium positioning and its potential for margin expansion.