The Next $1 Billion Athletic Brand Could Be This Under-The-Radar Footwear Company

On Holding is the next $1 billion athletic brand, according to Credit Suisse, which is why investors should plan to buy stock in the Swiss footwear company before it becomes the next $1 billion athletic brand.

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According to analyst Michael Binetti, after the company's latest quarterly results, he has raised the price target for the stock, and he maintains an outperform rating on the stock. Based on consensus expectations on Trade Algo, On Holding beat revenue forecasts in its fourth quarter, as well as provided strong guidance for the next quarter and a full year.

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"The momentum in the first quarter is already trending above guidance, while ONON is anticipating revenue growth of 61% YoY in the first quarter (Market: +38%). Based on the current momentum and 2H order books, ONON has suggested there may be an upside in the first quarter and into 2023," Binetti wrote on Tuesday.

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It was in September 2021 that On Holding made its debut on the New York Stock Exchange. In the early days of the company's listing, the initial offering was priced at $24 per share as a U.S.-listed Swiss footwear company. However, the stock has gained nearly 70% since its debut in 2022, which was a period of 54% decline for growth stocks in the face of rising inflation.

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It is not only that Binetti projects a 33% jump in stock price from its current price of $27.26 to $33 over the coming year, but it is also likely to be more than double that going forward. In other words, Binetti expects the stock price to rise another 21% before its next earnings report.

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This is because the analyst believes the footwear brand has a long runway to succeed. According to the analyst, the company can grow in a number of areas in the near- and medium-term, including expansion into tennis shoes and kids' footwear, according to his analysis. According to the note, the company has also recently opened a retail store in London, as well as planning additional stores in New York and Miami this year.

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Furthermore, the company had also built a strong pipeline of upcoming products, with 80% more preorders in the fall for its Cloudmonster, Runner, and Go styles than in the same period last year.

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ON Running has shown strong performance despite heavy price reductions throughout the industry (such as those experienced by premium peer LULU) because of the category and brand resonance with consumers.

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Onon looks forward to expanding its gross margins to 58.5% by the end of the year, and to 60% by the end of the decade, which is a strong indication that ONON has confidence in its guidance going forward.