Investors in On Holding AG (NYSE:ONON) had a good week, as its shares rose 9.5% to close at US$42.73 following the release of its second-quarter results. It looks like a pretty bad result, all things considered. Although revenues of CHF568m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 39% to hit CHF0.09 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on On Holding after the latest results.
Taking into account the latest results, the consensus forecast from On Holding's 20 analysts is for revenues of CHF2.28b in 2024. This reflects a decent 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 40% to CHF0.67. Before this earnings report, the analysts had been forecasting revenues of CHF2.30b and earnings per share (EPS) of CHF0.74 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$45.67, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values On Holding at US$57.61 per share, while the most bearish prices it at US$22.14. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that On Holding's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 30% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% annually. Even after the forecast slowdown in growth, it seems obvious that On Holding is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for On Holding going out to 2026, and you can see them free on our platform here..
You can also see our analysis of On Holding's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.