Balanced Risk Profile and Channel Execution Concerns Lead to Hold Rating on On Holding

In a report released today, Sam Poser from Williams Trading downgraded On Holding AG to a Hold, with a price target of $47.00.

Sam Poser has given his Hold rating due to a combination of factors tied to On Holding’s evolving business mix and execution risks. He believes that recent choices around how the company segments and allocates product are starting to hinder, rather than support, the long‑term wholesale growth trajectory in key regions like the Americas and, in time, Europe. While he still expects robust expansion in Asia-Pacific and continued gains from the direct-to-consumer channel, he sees these positives being offset by higher operating costs in DTC and mounting margin pressure, particularly as an overly broad assortment in wholesale channels undercuts the theoretical gross-margin benefits of DTC. As a result, he has cut his earnings forecasts and trimmed his price target, concluding that the risk/reward profile has become more balanced than it was previously.

At the brand level, Poser notes that On is resonating more as a lifestyle and casual running label, especially with millennial and Gen X consumers, than as a pure performance running brand or a magnet for Gen Z, which falls short of management’s ambitions. His channel checks suggest that specialty running retailers are seeing stronger demand for On’s lifestyle and après-run offerings than for its top-tier performance models, but On has been reluctant to fully meet that lifestyle demand in this channel, leading to lost sales opportunities among younger, influential shoppers who may not migrate to other retailers or to On’s own website. He also questions the effectiveness of the company’s self-described “pull” strategy and more cautious approach in the Americas, which appears less successful than previously assumed. Taken together, these issues led him to move to the sidelines with a Hold rating rather than continue to recommend aggressive new buying of the shares.