On Holding (ONON) Gets Wells Fargo Overweight and $48 Target

On Holding (ONON) picked up a fresh vote of confidence from Wall Street on Wednesday. Wells Fargo started coverage of the Swiss running-shoe brand at Overweight with a $48 price target, and the stock moved higher on the news.

Shares rose between roughly 3% and 7% at various points in the session. The $48 target works out to about 31% upside from Tuesday's close, according to MarketBeat's write-up of the note.

The pitch from analyst Ike Boruchow is that On is set to reaccelerate growth in 2027. He sees more than 15% upside to 2027 earnings estimates, plus room for the stock's valuation to expand, according to Investing.com's summary of the note.

His view of the backdrop isn't rosy. Boruchow says the athletic footwear market has too much inventory, too few sales and heavy discounting. On's response is what he likes: it's limiting how much product it ships to retailers, giving up some near-term sales to protect the brand.

That sets up a major product launch in 2027 built around new "supercritical" foam technology. The idea is that a scarcer, premium product holds its price while competitors slash theirs.

The note also leans on On's momentum relative to the pack. Even after a rough patch for athletic footwear, Boruchow argues the brand is still taking share from older names while building a more premium image.

Wells Fargo also calls On one of the fastest-growing brands it covers. The growth drivers it lists are expansion into apparel, lifestyle and new sports, more of its own stores and wholesale distribution, and more business in Asia, where the brand is still relatively underpenetrated.

"While a lot of the easy wins are behind the company, there is ample opportunity for the brand from here." — Ike Boruchow, Analyst, Wells Fargo

Boruchow also expects On to benefit as Nike loses share. If the category grows at a low- to mid-single-digit rate while Nike shrinks, he sees support for at least high-teens growth at On.

Wells Fargo isn't alone. Morgan Stanley initiated at Overweight in September with a $39 target, and Wolfe Research started coverage at Outperform with a $47 target on Oct. 21. MarketBeat's tally of analyst ratings shows two Strong Buys, 23 Buys, five Holds and one Sell, with an average target of $43.73.

Now the counterpoint. On's last report, in August, was a miss: earnings of $0.35 a share against the $0.42 analysts expected, on revenue of $1.05 billion versus $1.09 billion. Revenue still grew 13.5% from a year earlier, but the stock has been choppy, with a 52-week range of $26.36 to $51.08.

Wells Fargo flags its own risks. Market disruption could make it harder for On to hold its premium positioning, and heavy investment could squeeze profits if sales slow. Holding back shipments to retailers also means giving up revenue now for a payoff that doesn't arrive until next year.

One more data point worth knowing: insiders have been buyers. CEO Caspar Coppetti and fellow insider Olivier Bernhard each bought 65,000 shares on Aug. 14 at about $30.67. The stock now sits well above that level.

For investors, the takeaway is that this is a 2027 story, not a next-quarter story. The thesis depends on the foam launch landing and On's channel discipline paying off while the rest of the category fights over discounts.

Pay attention to the next earnings report for any change in how aggressively On is trimming shipments, and to how Nike and other rivals handle their inventory. Because the stock is up on the news, scaling in on weakness is easier to defend than buying the gap.

Bottom line: Wells Fargo is betting On's restraint now buys it pricing power later.