On Holding Shares Jump 11% on Bold Targets, Jefferies Cries Foul

Shares of On Holding (NYSE: ONON) rose as much as 11% Tuesday morning after the Swiss running shoe maker used its investor day to unveil ambitious targets for 2026 through 2029, including a new $1 billion share buyback.

The Zurich-based company set a high-teens constant-currency sales growth target, a gross margin above 65% and an adjusted EBITDA margin above 22% through 2029. The buyback authorization runs through the same year.

Wall Street did not uniformly cheer. Jefferies analysts pushed back on the plan, arguing the targets "raise the bar, they do not reset it."

The numbers behind the skepticism are stark. On's Americas segment grew just 4.5% in the second quarter. Third-quarter guidance calls for roughly 17% constant-currency growth — a sharp deceleration from the 36% growth the company posted six quarters ago.

"We see ambition, not the math," Jefferies wrote. The firm estimates On would need a sharp reacceleration off a base that keeps slowing to reach its targeted CHF 5.6 billion in net sales by 2029.

Inventory builds while growth slows

Jefferies flagged inventory levels running 1,774 basis points ahead of sales growth in the second quarter. Inventory rose 31.2% against sales growth of 13.5%.

The firm's own channel checks in South Florida found core products marked down repeatedly at run specialty retailers, with some discounts reaching 50% off.

The analyst also flagged On's growing reliance on paid traffic to drive growth on its website. Paid traffic made up 51.9% of trailing twelve-month visits to on.com — the highest share among peers tracked by the firm. In July, paid traffic rose 65% year-over-year while organic growth came in at 19%. Marketing spend climbed to 14% of sales from 12%.

Buyback as a signal

Jefferies described the $1 billion buyback as "a tell, not a thesis." The roughly 12% of market capitalization committed to repurchases does not address underlying demand questions, the firm argued, and markdowns rather than growth targets will determine On's 2027 results.

Jefferies maintains an Underperform rating on the stock with a $20 price target.

The market's verdict on Tuesday favored the bulls. The question hanging over the rally is whether On can reaccelerate a business whose Americas growth has slowed from 36% to 4.5% in six quarters — or whether Jefferies proves right that inventory build and deepening markdowns will erode the 2029 math.