ON Holding Surges, Leads High-End Retailers Into Reversal ON Holdings' robust results have it in a stock price reversal and leading other high-end retailers to fresh highs; momentum is rising in Q2.
This story originally appeared on MarketBeat
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ON Holdings' (NYSE: ONON) stock price surged following the Q1 earnings release and 2025 update, leading its and other high-end retail stocks into technical price reversals.
The results are favorable for itself, distinguishing it as a leading footwear, athletic, and apparel brand, and indicate strength in a category that includes names like Lululemon (NASDAQ: LULU), a more direct competitor, and Williams-Sonoma (NYSE: WSM), similarly positioned in the lifestyle category.
The takeaway is that ON Holdings stock gained more than 10% on the news, confirming a stock price reversal that began in April. Other stocks in the group are set up to do the same.
The chart action for ONON is very bullish. The 10% stock price surge confirms a Head & Shoulders and could easily result in a move to $60 or $64, the 2025 highs.
The $64 level is the critical resistance point; a move above opens the door to fresh all-time highs, a more significant rally and potentially triple-digit gains for long-term holders. The price action in Lululemon and Williams-Sonoma is following suit.
ON Holdings Accelerated in Q1, Raised Guidance for Q2
ON Holdings Q1 results were robust, highlighting its brand strength, global marketing success and resilience in end-market consumers. The company's revenue surged by 43% YOY to an equivalent $862.9 million on strength in DTC, wholesale, all operating segments and regions. Direct-to-consumer sales increased by 42.4%, leading wholesale by nearly 400 basis points. Wholesales are up a solid 38.6% with systemwide strength in shoes, apparel, and accessories. Shoes, the core business, grew by 40.5% while Apparel and Accessories, both growth drivers, advanced by 93% and 97% respectively.
The margin news is more impressive. The company's leaning toward efficiency, improving revenue leverage, and a full-priced selling environment aided gross margin improvement and better-than-expected bottom-line results. The only bad news is that earnings are down compared to last year, but the contraction was expected due to shifts in FX values. Despite this, profitability remains, the balance sheet is healthy, and equity is rising.
ON Holdings' guidance is why the stock advanced strongly following the report. The company has momentum and plans to build on it this year, expanding into new markets and driving comps with its pipeline of products. Execs raised the forecast from at least 27% to 28% growth and may increase the forecast again later in the year.
Execs embedded a higher degree of uncertainty into the profit outlook, which was smart. However, they still expected expansion relative to the Q1 result and may be overly cautious given positive developments in trade relations. In the long term, ON Holdings is expected to sustain a double-digit top-line growth pace through the decade's end.
Sell-Side Trends Align With ON Holdings Stock Price Bottom
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The sell-side trends, including analysts, institutional, and short-selling activity, align with a bottom in ON Holdings stock.
The short interest rate is still elevated at nearly 6%, sufficient to fuel a short-covering rally, but it has fallen since its peak and is near a long-term low in mid-May 2025.
It will likely continue falling as the year progresses. Institutional activity is likewise bullish, with them buying on balance and increasing their net holdings in Q1 and Q2 2025.
Analysts provided a headwind for ONON stock before the release, with several making price target reductions. However, the stock is rated firmly as a Buy, and the revisions lead to the high-end range of targets, a 5% to 15% upside relative to mid-May trading levels when reached.
The trend in sentiment may revert to price target increases now that results are in, a positive catalyst for the stock price, leading to a new all-time high.
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