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Investing.com -- Morgan Stanley resumed coverage of sportswear brands with a cautious view on the group, citing structural industry fragmentation, elevated promotions, and weak consumer sponsorship. Analysts led by Alex Straton wrote that these factors create "a triple headwind" for the sector.
The Wall Street giant named On Holding as its only Overweight-rated stock in the group, while rating Nike and Under Armour Underweight and Adidas Equal-weight.
For On Holding, Morgan Stanley said the stock's roughly 40% year-to-date decline "overstates medium-term fundamental deterioration," with consensus underestimating both growth durability and margin maturation. The firm set a $39 price target, implying about 45% upside, and said it expects a re-rating to take time as new management builds credibility.
The analysts said On's Americas and EMEA growth outlooks are more durable than the Street assumes, pointing to continued direct-to-consumer strength and healthy trends in Europe, including roughly 21% constant-currency growth in the second quarter. They also called profitability "the 'Dark Horse,' or most underappreciated part of the equity story," citing potential margin expansion under new management.