On Holding (NYSE:ONON) heads into its third-quarter results with a continued buy rating from UBS, which sees scope for longer-term earnings growth but expects the latest numbers to offer limited upside as investors weigh strong brand interest against softer consumer spending.
UBS is anticipating third-quarter sales growth excluding foreign exchange effects and an EBITDA margin in line with expectations.
That assessment rests partly on guidance ON Holding outlined at its September 22 analyst day, when it projected third-quarter sales growth of 17%, excluding foreign exchange effects.
UBS expects the company to retain its reiterated fiscal year 2026 growth outlook in the low-20% range, implying similar fourth-quarter growth, also excluding foreign exchange effects.
Looking further ahead, any initial fiscal year 2027 outlook would likely indicate growth in the high teens on the same basis, consistent with its three-year framework, UBS estimates.
Those expectations also broadly match investor views, UBS says, describing sentiment as mixed as confidence in brand appeal meets concerns about a lackluster athletic footwear market.
Channel checks reflect that tension, with ON Holding's global website visits rising 56% year over year in the third quarter, versus 48% in the second, according to data UBS cited.
Yet UBS Evidence Lab's European transaction monitor showed EU spending growth slowing to 8% from 44%, suggesting stronger website traffic was accompanied by weaker spending momentum.
Despite the mixed demand signals, UBS remains positive on longer-term growth, forecasting five-year compound annual earnings-per-share growth of 29% and describing the shares as attractively valued.
For the upcoming report, however, UBS expects a smaller reaction than the options market's implied 8.9% move in either direction, compared with a historical average of 10.4%.
