Jefferies keeps On Holding stock rating at underperform after Mbappe injury

Jefferies maintained its Underperform rating for On Holding AG (NYSE:ONON) after soccer star Kylian Mbappe suffered a knee injury during a match wearing the company's prototype boots. Mbappe, whose record 67th goal for France helped France defeat Turkey 1-0, was diagnosed with a hyperextended left knee. The injury could sideline him for 10 to 15 days.

On Holding signed the star player as a global ambassador and equity partner earlier this month, ending his 20-year association with Nike. The company's prototype boots, featuring LightSpray branding and a code, are expected to hit stores in 2027. Jefferies highlighted a recent decline in On Holding's reported growth, with total growth falling from 36% to 13% in six quarters.

The firm also noted that Americas reported growth was at 4% and wholesale sell-in at 5%, with inventory growth outpacing sales growth. Despite the setback, On Holding remains a profitable company with a 65% gross profit margin and nearly $4 billion in annual revenue. The stock has dropped 35.5% year-to-date but analysts believe it may be undervalued relative to its fair value.

Jefferies' 2027 EBITDA estimate is significantly lower than consensus. The company's ambitious 2029 targets include revenue growth in the high teens, a gross margin above 65%, and an EBITDA margin above 22%. Analysts remain cautiously optimistic about On Holding's growth potential, with several firms maintaining an Overweight or Outperform rating and offering varying price targets.