On's (ONON) continued focus on innovation, performance, athletes, sports, and direct-to-consumer selling while maintaining a premium brand position could deliver industry-leading sales growth and earnings beats, UBS Securities said Tuesday in a note.
UBS forecasts On recording 18%, 20%, and 29% of 5-year sales growth, adjusted EBITDA, and earnings per share compound annual growth rates, respectively, and expects strong growth to continue from there, according to the note.
The brand is gaining traction with younger customers, and its expansion within this demographic is an under-appreciated long-term growth driver, the brokerage said.
The company maintained its full-year sales growth guidance at 23%, despite delivering 26% top-line growth in Q1. UBS sees this as a sign of caution, given the macro uncertainty, rather than an indication of weaker demand in H2, the brokerage added.
On's nearly $0.1 Q1 earnings per share beat versus the UBS estimate drives most of the brokerage's $0.15 increase to its full-year EPS estimate, according to the note.
UBS kept a buy rating on On with a price target of $85.
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