On Holding, the Swiss sportswear brand known for its cloud-like running shoes, could be on the verge of its biggest product cycle yet, according to analysts at UBS Securities. In a note published Tuesday, the investment bank said the company's upcoming "superfoam" midsole technology should help sustain rapid sales growth well into the late 2020s, even as the broader retail environment gets more promotional.
UBS projects that On's foreign-exchange-adjusted sales will climb 19.5% in 2027 and 18.2% in 2028, driven by the rollout of superfoam across nearly all of the brand's major running lines by the end of 2027. For context, that would be a slowdown from the company's recent hyper-growth phase—On has posted revenue increases above 20% in several recent quarters—but still far ahead of the broader athletic footwear market, which typically grows in the low single digits.
What is superfoam and why does it matter?
Superfoam is a new cushioning material for the midsoles of running shoes, the layer between the outsole and the upper that absorbs impact and returns energy to the runner. The technology is central to On's strategy to compete with industry giants like Nike and Adidas, as well as upstart rivals like Hoka, which have all been investing heavily in advanced foam compounds.
UBS believes superfoam represents On's "biggest innovation cycle yet," a claim that carries weight given the brand's history of rapid product adoption. The company first gained fame with its distinctive hollowed-out sole design, and it has since expanded into apparel and accessories. But running shoes remain the core of the business, and a new flagship technology could help On maintain its premium pricing—a key concern for investors as retailers increasingly resort to discounts to move inventory.
The bank's note suggests that if On can successfully pair the superfoam rollout with its ongoing push toward direct-to-consumer sales, it can protect its margins and keep growth humming. Direct sales typically carry higher margins than wholesale, and they also give the company more control over pricing and brand image.
Why the growth forecast matters
On's stock has been a standout performer since its 2021 initial public offering, but it has also been volatile, with shares swinging on quarterly results and broader market sentiment. The UBS forecast provides a longer-term view that could reassure investors worried about a slowdown as the company's base of sales gets larger.
For everyday investors, the key takeaway is that On is not just a one-hit wonder. The company has a pipeline of new products that could keep it growing at a pace most apparel brands can only dream of. However, the forecast also comes with caveats: it assumes On can execute on its product roadmap and maintain its premium positioning in a competitive market.
UBS's optimism on On comes as other analysts are more cautious on consumer discretionary names. For instance, UBS has warned that Aramark's 2027 growth guidance may disappoint investors, highlighting the mixed sentiment across the sector. Similarly, Morgan Stanley recently cut its rating on Halozyme as royalty growth is seen peaking, showing that not all growth stories are built to last.
What it means for investors
For those considering On Holding as an investment, the UBS note offers a bullish case: the company has a clear catalyst in superfoam, a growing direct-to-consumer business, and a brand that resonates with younger, performance-oriented runners. The projected growth rates of nearly 20% are well above the industry average, and if achieved, they could support further stock appreciation.
But investors should also weigh the risks. The athletic footwear market is fiercely competitive, and consumer spending on discretionary items like premium running shoes can be sensitive to economic downturns. On's premium pricing strategy could be tested if a recession hits, and the company's reliance on a single product category—running shoes—makes it more vulnerable to shifts in fashion or technology.
Moreover, the forecast is just one bank's opinion. UBS's estimates could prove too optimistic if the superfoam rollout faces delays or if competitors launch similar technologies that dilute On's edge. As always, it's wise to consider a range of analyst views and to think about how On fits into a diversified portfolio.
In the meantime, On continues to expand its presence, and the market will be watching closely for any signs of the superfoam hitting shelves. The company's next earnings report will likely provide more color on the rollout timeline and early consumer response.
For a broader perspective on growth stocks, investors might look at Magna's 2030 plan targeting 15% annual EPS growth or RBC's view on Adobe's agentic AI and cloud synergy—both examples of companies with long-term growth strategies that analysts are scrutinizing.
Ultimately, UBS's note is a vote of confidence in On's ability to keep innovating. Whether that translates into market-beating returns will depend on execution, competition, and the broader economy.
