Raymond James upgrades On Holding stock rating on valuation By Investing.com

Raymond James upgraded On Holding AG to Strong Buy from Outperform and set a $52 price target, implying about 42% upside from the current $36.60 share price. The firm cited 22% projected EBITDA growth in 2027, a 10x EV/EBITDA multiple after stock-based compensation adjustment, and improving FX headwinds to 4.5 percentage points from 6.5 points. While CEO Martin Hoffman is stepping down, Raymond James said the co-founders remain in control and expects the company to beat Q1 2026 expectations on stronger channel checks and price increases.

Analysis

The setup looks less like a broken growth story and more like a multiple de-rating caused by governance optics plus a temporarily noisy input-cost narrative. If the market is treating the CEO transition as a signal of strategic disruption, that may be a category error: in founder-led consumer brands, continuity of ownership and product cadence often matters more than the named CEO, and that usually supports faster sentiment repair than the selloff implies. The bigger second-order effect is that a cleaner management structure can actually improve execution on distribution, pricing discipline, and product segmentation, which matters more than the headline transition over the next 2-3 quarters.

The real question is whether the market is underestimating operating leverage from direct-to-consumer mix and premium product launches. A brand with high gross margin and accelerating demand can re-rate quickly if sell-through remains strong, because incremental revenue drops disproportionately to EBITDA once fixed marketing and logistics are absorbed. That makes the next earnings print the key catalyst: a modest beat paired with stable guidance can force systematic shorts and disappointed longs to cover, especially if FX headwinds keep easing and channel data stays firm.

The contrarian view is that the pullback may already have priced in a relatively benign transition, while the bigger risk is not management but elasticity: if price increases or higher fuel costs start affecting discretionary spend, the premium athletic category can decelerate faster than consensus expects. The stock likely needs only one quarter of lower-than-feared demand volatility to recover meaningfully, but if consumer demand softens or FX reverses, the de-rating can persist for months. In that sense, the setup is asymmetric: near-term downside is driven by sentiment and valuation compression, while upside comes from a simple confirmation of demand durability.

Key Decisions for Investors

• Go long ONON on a 4-8 week horizon into the next earnings window; the risk/reward favors buying weakness after governance-driven selloffs, with a stop if demand signals or guidance weaken.
• Use call spreads on ONON rather than outright equity to capture a post-print re-rating while limiting downside if the CEO transition becomes a longer-duration multiple overhang.
• Pair long ONON vs short a slower-growth premium athletic footwear peer for 1-2 quarters; the thesis is that ONON’s growth and margin mix can outperform if channel checks remain constructive.
• If already long, trim only into strength after confirmation of demand rather than into the post-news drawdown; the market is more likely pricing scenario risk than actual fundamental deterioration.
• Avoid chasing the move until the next data point if you need lower-vol entry; a weak consumer tape would make this a better mean-reversion buy after earnings rather than immediately.