M Science published a cautious report against On Holding AG (NYSE: ONON) on Friday. Shares of the sneaker company are in the red at writing.
On Holding stock does not currently pay a dividend either.
Why is M Science cautious on On Holding stock?
On Holding is facing a slow down in the second quarter in two of its largest markets: Europe and the United States, as per M Science.
Earlier in June, the Swiss firm named Zendaya a brand partner for On Running and confirmed that the Spiderman lead has agreed to a multi-year collaboration with the sportswear company.
But the related boost is proving to be short-lived as On Holding stock has lost some 10% over the past two weeks, as per the research report by M Science.
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On Holding raised sales guidance in May
M Science took a cautious tone on On Holding today even though it reported market-beating financial results in May.
More importantly, the New York listed firm raised its guidance for the full year as well. Martin Hoffman – the co-chief executive and finance head of On Holding said at the time:
Q1 was a further step in the execution of our long-term strategy to be the most premium global sportswear brand. This serves as a validation of the strong demand we’ve experienced across all channels, regions, and product categories.
On Holding expects a minimum of 30% annualised growth in net sales this year that translates to at least CHF 2.29 billion ($2.56 billion) sales in 2024.
That’s perhaps why analysts at Telsey Advisory Group do not agree with M Science’s cautious stance on On Holding shares.
Telsey Advisory is bullish on On Holding stock
Telsey Advisory reiterated its “outperform” rating on On Holding stock and raised its price objective in a recent research note to $47 that translates to about a 20% upside from here.
Analysts at the investment firm are constructive as the sneaker company is upgrading its marketing efforts to become a larger global brand – one that caters not only to athletes but also to everyday users.
Unlike M Sciences, Telsey Advisory is bullish on Zendaya agreeing to be the first global ambassador of On Holding as well.
Notable retailers like Dick’s Sporting Goods and Foot Locker have also talked of momentum and expansion of On Holding products in their stores. The Swiss firm named Laura Miele (President of Electronic Arts) to its board as well last month.
Short interest in On Holding stock currently sits at about 16% as of writing on Friday. After Nike, our market analyst Crispus Nyaga also expects On Holding to be the next big thing.
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