Recent headlines underscore this momentum. On November 12, 2025, the company reported record third-quarter results, with net sales surging 24.9% year-over-year to CHF 794.4 million ($820 million), beating consensus estimates by over 5%. Adjusted EBITDA margins expanded to 22.6%, reflecting operational leverage, while the firm raised its full-year 2025 guidance to CHF 2.98 billion at current FX rates, implying at least 34% constant-currency sales growth. This comes after a period of share weakness, with ONON down nearly 36% year-to-date prior to the report, pressured by macroeconomic headwinds and tariff concerns. CEO Caspar Coppetti highlighted “strong momentum in the first days of November,” attributing gains to robust demand in the Americas and China, bolstered by high-profile partnerships like Zendaya’s endorsement.
These results are not mere quarterly noise but a validation of a deeper structural shift: On’s relentless focus on premium product innovation is positioning it to capture durable market share in the high-growth performance running category. This article posits a forward-looking investment thesis centered on that single fundamental driver—premium innovation as the catalyst for sustained 10-15% annual market share expansion in running footwear through 2030. More likely than not, this will drive ONON shares toward $60 within the next 12 months, implying 70% upside from current levels, as evidenced by historical analogues like Hoka’s ascent under Deckers Outdoor.
We will explore this thesis through four sections: an overview of the innovation edge and its historical precedents; supporting qualitative and quantitative evidence, including a discounted cash flow (DCF) valuation; key risks and counterarguments; and On’s positioning within the broader athletic footwear sector. This analysis draws on industry reports, peer benchmarks, and On’s financial disclosures to provide actionable insights for sophisticated investors.
The Innovation Thesis: Why Premium R&D Will Drive Market Share Dominance
At the heart of On’s outperformance lies its commitment to premium innovation, defined here as heavy R&D investment in proprietary technologies that command $150-$200 price points while delivering superior athlete feedback. Unlike broad-line incumbents chasing volume at lower ASPs (average selling prices), On targets the affluent, performance-obsessed runner willing to pay for marginal gains in speed, recovery, and sustainability. This focus is underexplored in current discourse, which often fixates on DTC channel shifts or macro consumer spending; yet, it represents the linchpin for long-term moat-building, as evidenced by On’s gross margins expanding to 65.7% in Q3 2025—well above the industry average of 45-50%.
Historically, brands excelling in this vein have reaped outsized rewards. Consider Hoka One One, acquired by Deckers Outdoor (NYSE: DECK) in 2013 for a modest sum. Hoka’s maximalist cushioning—much like On’s CloudTec—disrupted the running shoe market by addressing pain points in traditional designs, leading to strong post-acquisition revenue growth averaging 40-50% YoY in key years, with peaks exceeding 90%. Deckers’ stock surged over 1,000% from 2018-2023 as Hoka captured 5-7% U.S. running market share, per NPD Group data, validating the premium innovation playbook. On mirrors this trajectory: Since its 2021 IPO, R&D spend has averaged 4-5% of revenues (vs. Nike’s 2-3%), fueling launches like the Cloudboom Strike, a carbon-plated racer that shaved seconds off elite marathon times. The Q3 earnings lift guidance by 2-3 points, citing “technology-driven demand,” directly underscoring this as a catalyst accelerating share gains.
This thesis gains plausibility from industry trends: The global running shoes market is projected to reach approximately $17 billion in 2025, growing at a 5% CAGR through 2033, fueled by athleisure and wellness booms, with premium segments (ASP > $150) expanding twice as fast at 10%+. On’s 39% TTM revenue growth far exceeds Nike’s 2-3%, positioning it to echo Hoka’s path rather than Allbirds’ stumble— the latter faltered post-IPO with flat innovation, seeing shares crater 90% as it chased casual over performance.
Evidence Base: Qualitative Edge Meets Quantitative Tailwinds
Qualitatively, On’s innovation manifests in athlete endorsements and product virality. Partnerships with Zendaya and triathletes like Gustav Iden amplify brand cachet, driving 27% DTC growth in Q3—up from 20% prior—via immersive online experiences showcasing CloudTec’s biomechanics. This echoes Lululemon’s women’s athleisure pivot in the 2010s, where targeted innovation yielded 30%+ CAGR and a 500% stock run. Quantitatively, On’s metrics shine: 112% projected EPS growth to $1.56 in FY2025, ROIC at 6.58% (rising), and debt/equity of 0.39 signal efficient scaling. Peers like Deckers trade at 20x forward sales on 15% growth; On’s 3.66x P/S on 39% growth appears reasonable, per Finviz benchmarks.
To quantify the thesis, we apply a DCF valuation, chosen for its focus on free cash flow (FCF) generation from innovation-driven margins—ideal for a growth story like On. Assumptions: Base revenues at CHF 2.98B for 2025 (per guidance), 25% CAGR through 2028 tapering to 10% terminal (aligned with running market growth), EBITDA margins expanding to 25% by 2027 (from 22.6%), capex at 5% of sales, WACC of 9% (beta 2.18, risk-free 4%, equity premium 5%). This yields FCF of CHF 500M by 2028; discounting back plus terminal value (3% growth) implies enterprise value of $18.5B, or $62 per share—77% above spot. Sensitivity: A 20% growth shave drops fair value to $55; Hoka’s historical 25%+ CAGR post-innovation cycles validates the inputs. Weaknesses include FX volatility (On reports in CHF) and execution risk, but low debt mitigates. Independent models suggest a range of $39-65 per share, with analyst consensus at $62.
Competitively, On holds 2-3% global running share (vs. Nike’s 30%), but its 44% Q/Q sales growth dwarfs Adidas’ 5%, per Q3 previews. Among challengers, On’s premium ASP ($180 avg.) outstrips Hoka’s $160, enabling margin upside.
Risks and Counterarguments: Navigating Execution Hurdles
Skeptics may argue On’s 96x trailing P/E signals overvaluation, vulnerable to consumer pullback in a high-interest environment. Indeed, shares dipped 30% pre-Q3 on tariff fears under Trump policies, echoing 2018-2019 trade war drags on peers like Under Armour (down 50%). Counterfeiting erodes 21% of premium footwear value, per OECD, and Allbirds’ 90% post-IPO plunge illustrates innovation fatigue risks if CloudTec feels iterative.
Yet, historical data tempers these: Hoka navigated 2020 tariffs via supply chain diversification (now 60% Vietnam/Mexico), boosting margins 500bps; On’s 2.0x quick ratio and 31% insider ownership suggest resilience. Q3’s tariff-proof China growth (triple-digits) and one-off margin tailwinds fading to normalized 63% still support 20%+ EBITDA, per guidance. If growth slips to 15%, DCF fair value holds at $50—still 40% upside.
Sector Context: On’s Niche Amid Athleisure Expansion
The $138B athletic footwear market grows at 4% CAGR to 2034, with running shoes claiming 37% share and premium athleisure accelerating to 6.3% amid wellness trends. North America (36% share) favors innovators like On, where DTC penetration hit 40% vs. Nike’s 25%. Peers falter: Adidas’ running sales stagnated at 2% growth in 2024, ceding ground to challengers; Hoka’s 2022 70% surge prefigures On’s potential, with Deckers up 38% YTD 2024 on similar dynamics.
Macro tailwinds include urban fitness initiatives (e.g., India’s $25B walkability push by 2025), but On’s Europe/Asia exposure (50% sales) hedges U.S. slowdowns. Versus microcaps, On’s $11.5B cap and 7.65% short interest ensure liquidity, though beta 2.18 amplifies volatility.
Forward Outlook: Catalysts to Monitor for Thesis Validation
On Holding’s premium innovation thesis portends robust upside, with market share gains likely propelling revenues beyond 25% CAGR and shares to $60, consistent with analyst targets. Investors should track Q4 holiday DTC comps for sustained momentum, R&D announcements (e.g., next-gen CloudTec) as leading indicators, and APAC penetration amid easing tariffs. If margins hold 23%+ into 2026, the bull case strengthens; slippage below 20% warrants reevaluation.
This analysis is for informational purposes only and does not constitute investment advice. Trading involves substantial risk, and readers must conduct their own due diligence before making decisions. Past performance is no guarantee of future results. As of November 12, 2025.
Sources: Yahoo Finance (Q3 Earnings, link); Finviz (Financial Metrics, link); Seeking Alpha (Analogues, link); Custom Market Insights (Market Trends, link); Alpha Spread (DCF, link); Footwear News (Hoka Comparison, link); OECD (Counterfeiting, via Mordor).