3 Reasons On Holding’s Sell-Off Is Over and New Highs Are Coming

Key Points

• On Holdings is proving the naysayers wrong, outperforming and raising guidance as it takes share from competitors.
• Revenue growth is driving robust leverage and margin gains.
• Analysts and institutional trends suggest a double-digit upside for this stock.

There are numerous reasons why the On Holding’s NYSE: ONON 2025 sell-off was irrational, but the three that stand out are the first, second, and third time it raised guidance this fiscal year. Valuation was a concern; the stock traded at approximately 100 times its current-year earnings—an astronomical multiple. However, the multiple was pricing in a robust growth outlook that proved to be cautious.

In this scenario, the stock price can easily rebound to retest its prior highs and is likely to continue rising in 2026. That’s because the company is firing on all cylinders, delivering industry-leading growth as it takes share from key retail competitors such as Nike NYSE: NKE and Lululemon NASDAQ: LULU.

On Holdings Is Levered for Growth and Expanding Margins

On Holdings’ Q3 earnings release proves that its strategy is working and its brand and product resonate with consumers. The $993.7 million in net revenue grew by 25% year-over-year (YOY), despite global macroeconomic headwinds. The figure outperformed MarketBeat’s consensus estimate by a significant margin, driven by double-digit gains across all comparable operating metrics. 

Systemwide, growth topped 34% on an FX-neutral basis, with the higher-margin DTC channels up 37.5% and Wholesale up by 32.5%. Regionally, the APAC region was the strongest, with a 110% increase, followed by 33% in EMEA and 21% in the Americas. Regarding product lines, the core shoe business grew by 30% while apparel and accessories grew by robust triple-digit figures. 

Margin news is also solid, underpinning the outlook for share price gains. The company reported significant improvements in leverage, tied to revenue growth and operational quality. The results include triple-digit increases in gross and net margins, as well as quadruple-digit gains in the adjusted results.

The bottom line is that 54 cents in adjusted earnings is up more than 150% YOY, and margins are expected to remain robust in upcoming quarters. 

Guidance is good. On Holding raised its guidance across all metrics, expecting Q3 momentum to be sustained in Q4, and leveraged bottom-line improvements. The key takeaways include revenue growth of 34% for the year, a 300-basis-point increase from the prior guidance, an additional 150-basis-point improvement in gross margin, and at least 60-basis-point expansion in adjusted EBITDA margin over previously expected levels, resulting in EPS forecasts that are well above consensus expectations as of mid-November. 

Institutions Bought the Dip in 2025, Analysts Forecast Double-Digit Upside

The institutional and analyst trends are favorable for ONON investors, with the first group buying and the second forecasting a double-digit upside. Institutions own only 36% of the stock but have been buying on balance all year, and activity accelerated in Q3 when share prices reverted to long-term low levels. Bullish activity is persisting in Q4, with October’s balance at more than $2 bought for each $1 sold. 

Analysts' activity is equally bullish. The group issued several price target reductions in October amid caution creeping into the market. However, the reductions align with the consensus, which forecasted a 40% upside ahead of the release, and all other trends are positive.

Coverage is solid, the Moderate Buy rating is firm, and the price target is on the rise. The likely outcome is that analysts will reaffirm or raise targets as the year progresses, boosting market sentiment and price action. 

On Holdings Stock Price Confirms Bottom and Robust Rebound Potential 

ONON’s price surged by 25% following the Q3 release and guidance update, confirming support at a critical level that aligns with the long-term moving average. This signals a resurgence of faith in a market that is unsure of what to expect and has robust potential for rebounding.

The question is whether the stock price can get above the 30-day EMA, which seems likely, given the underlying business momentum. Indicators such as stochastic and MACD align with an outlook for higher prices, as they are low in their respective ranges and on the verge of signalling a strong buy.