ON Holding growth story intact says UBS analysts Proactive uses images sourced from Shutterstock
OH Holding (NYSE:ONON) could see its shares nearly double, according to UBS, which reiterated its ‘Buy’ rating and $85 price target on the athletic footwear maker following the release of its fourth quarter earnings.
“We expect P/E expansion to drive ONON toward our $85 price target,” they wrote, adding that the company’s Q4 report suggests its long-term growth trajectory remains intact despite foreign exchange headwinds.
UBS wrote that it believes the company’s “fundamental growth story remains intact, despite FX potentially causing more of an unfavorable impact than previously thought.”
The firm forecasts five-year compound annual growth rates of 17% for sales, 19% for adjusted EBITDA, and 28% for earnings per share.
UBS highlighted three main takeaways from On’s fourth-quarter results. First, the company expects first-half 2026 sales growth excluding foreign exchange to exceed its full-year guidance of 23%, even as it faces tougher year-over-year comparisons.
UBS wrote that management’s confidence in the front-half outlook appears tied to strong early performance from first-quarter product launches. The analysts added that the implied second-half 2026 sales outlook “appears conservative” given a solid product pipeline and a strong Fall/Winter 2026 order book.
Second, UBS pointed to margin performance as a key enabler of reinvestment. The analysts wrote that On’s premium positioning and supply chain innovation are driving stronger-than-expected gross margins, allowing the company to reinvest in the brand while offsetting tariff and FX pressures.
“We believe ONON’s strategic brand reinvestments have underpinned its industry-leading growth and will continue to support strong performance going forward,” the analysts wrote.
Third, UBS highlighted progress in scaling On’s LightSpray technology. Ahead of a global launch of its robotically manufactured shoe in the spring, the company announced a new LightSpray factory in South Korea that increases capacity for the product by 30 times.
“We think ONON’s growth will positively surprise the market and cause the stock’s P/E to rerate higher,” the analysts wrote.
The firm argued that such a growth outlook supports a higher valuation multiple. UBS expects a 33x forward two-year P/E multiple, compared with roughly 20x currently.
UBS lowered its fiscal 2026 earnings per share estimate by about 7%, reflecting a more challenging-than-expected foreign exchange outlook as well as expectations that the company will continue reinvesting gross profit back into the business. The firm reduced its fiscal 2026 sales and operating margin forecasts accordingly.
However, the analysts left their fiscal 2027 and 2028 EPS estimates unchanged and raised their 2027 sales growth forecast by roughly 50 basis points, citing the potential for current investments to support stronger revenue next year.