On Holding's Conservative 2026 Guidance Clashes with DeepValue's Wait-and-See Stance Amid Valuation Concerns

What happened

On Holding issued its initial FY26 guidance, projecting at least 23% revenue growth and an adjusted EBITDA margin of 18.5–19.0%, which a Seeking Alpha article labels conservative and a buy opportunity despite a 30% share decline from last year's peak. The article suggests Wall Street's higher CHF 3.75B sales expectation overlooks On's historical outperformance and potential upside. However, the latest DeepValue master report rates On as a 'WAIT' with conviction 3.0, highlighting a rich valuation of 55x P/E and 29x EV/EBITDA that already embeds sustained high growth. The report emphasizes risks from intensifying competition with Nike and Hoka, and advises waiting for either a price pullback to around $40 or clearer proof that 2026 growth exceeds 25% with gross margins above 60%. This guidance, while possibly setting a low bar, does not address the core valuation and competitive pressures identified in the report, keeping the investment case precarious.

Implication

The bullish article promotes buying On despite soft guidance, but this overlooks the deep-seated risks highlighted in the DeepValue report, such as unsustainable multiples and fierce competition from Nike and Hoka. On's guidance, though potentially beatable, fails to provide the certainty needed to justify a 55x P/E, especially with external signals showing competitive catch-up and consumer price sensitivity. Investors should monitor upcoming quarterly results for growth deceleration or margin compression, which could trigger significant downside given the lack of valuation cushion. Waiting for a pullback to around $40 or for management to confirm 2026 targets with robust metrics offers a safer entry point, aligning with the report's base case. Ultimately, the implication is clear: until On demonstrates it can defend its premium positioning against larger rivals without sacrificing margins, the stock remains overpriced and speculative.

Thesis delta

The new article advocates buying On based on conservative guidance, but this does not shift the fundamental investment thesis from the DeepValue report, which already anticipates such guidance and maintains a wait stance due to high valuation and unproven durability. The thesis remains unchanged: investors should wait for either a price decline to more attractive levels or concrete evidence that 2026 growth and margins will sustain at elevated rates, as current multiples leave no room for error.