Shares of the brand with Federer's investment soared 28%. Are they worth buying?

Shares of Swiss brand On Holding rose 27.5% after posting a strong quarterly report and raising its full-year revenue forecast for the third straight time. Amid stagnation at rivals like Nike and Hoka, On has maintained its no-discount sales strategy and relies on the premium segment and technological innovation. Despite the stock down nearly 17% for the month, analysts maintain a positive outlook on the company.

Shares of sneaker and sports equipment maker On Holding, in which tennis player Roger Federer has invested, rose 27.5% on Nov. 12 after the company raised its annual revenue forecast for the third straight time and reported another quarter of double-digit growth despite a general slowdown in the athletic footwear market.

The company, known for its innovative running shoes, now expects sales in fiscal 2025 to reach CHF 2.98 billion ($3.7 billion) - up 2.4% from its previous forecast. At constant prices, revenue growth should reach 34% versus the 31% previously projected. The new forecast slightly exceeded the expectations of analysts LSEG (2.97 billion francs), reports CNBC.

"Our focus on the premium segment, full-price sales, innovation and combining functionality with design is resonating strongly with customers," CEO Martin Hoffmann told CNBC. - Ma's results confirm this: we are showing solid revenue growth and strong margins, demonstrating that we are maintaining our strategy of selling without discounting and maintaining a premium level across all sales channels."

The company significantly beat Wall Street's expectations for both earnings and revenue. Adjusted EPS amounted to 0.43 francs ($0.54) versus the forecast of 0.25 francs ($0.31). Revenue rose to 794 million francs ($991 million), beating analysts' forecast of 763 million francs.

Net income for the quarter jumped nearly 290% to 118.9 million francs ($148 million), or 0.36 francs ($0.45) per share.

On's success stands out noticeably from its competitors, CNBC writes . While Nike and Hoka expect either a decline in sales or their slowdown due to lower consumer activity and rising duties, the Swiss company demonstrates the opposite dynamics.

Unlike most manufacturers that plan to stimulate demand with holiday discounts, On declined to hold sales even for Black Friday, said co-founder Caspar Coppetti.

"We maintain full prices during the holiday season despite a very competitive and discount-oriented market environment. This is our way of emphasizing the premium status of the brand and keeping prices high," he emphasized .

This approach puts On closer to luxury brands: the company aims to be the most premium brand in the sports industry - not only through its pricing policy, but also through innovation in the design and technology of footwear and apparel.

Shares of On Holding have fallen nearly 17% over the past month as investors reassess the company's growth prospects and fair value estimates, Simply Wall Street notes . Analysts warn that the company's reliance on premium pricing and aggressive global expansion could come with risks: if demand weakens or competition intensifies, it could put pressure on profitability and margins.

Nevertheless, sentiment on Wall Street remains generally positive. According to MarketWatch, 23 analysts recommend buying On Holding shares, three advise holding, and only one recommends selling.

This article was AI-translated and verified by a human editor