Buy this under-the-radar footwear stock that could become the next $1 billion athletic brand, Credit Suisse says

Published Wed, Mar 22 202311:11 AM EDTUpdated Wed, Mar 22 202312:11 PM EDT

It's time for investors to buy into Swiss footwear stock On Holding before it becomes the next $1 billion athletic brand, according to Credit Suisse. Analyst Michael Binetti raised his price target on the stock, and maintained an outperform rating after the firm's latest quarterly results . On Holding beat revenue expectations in its fourth quarter, and issued strong first-quarter and full-year guidance, according to consensus expectations on FactSet. ONON YTD mountain On Holding shares have surged 68% year to date. "Importantly, momentum in 1Q is already trending above guidance, with 1Q guided to revs +61% YoY (Street: +38%). ONON has suggested there could be upside to both 1Q and 2023 based on current momentum and 2H order books," Binetti wrote on Tuesday. On Holding made its public debut on the New York Stock Exchange in September 2021. At the time, the U.S.-listed Swiss footwear company priced its initial offering at $24 per share. In 2022, it dropped 54% as growth stocks were punished amid rising inflation. However, the stock is up nearly 70% year to date. What's more, the analyst expects to see even further upside. Binetti's $33 price target, which was raised from $28 previously, implies the footwear stock can jump 21% from Tuesday's closing price of $27.26. The stock was up about 4% during Wednesday trading. That's because of what the analyst sees as a "long runway" for the increasingly popular footwear brand. The company has multiple points of growth in the near and medium term, including an expansion into tennis and kids shoes, according to the analyst. It has also opened a new retail store in London, and is planning more openings this year in Brooklyn and Miami, according to the note. Additionally, it also has a strong product pipeline, with fall preorders for its Cloudmonster, Runner and Go styles up 80% year over year, the note read. "Given the category and strong brand resonance with consumers, ON Running has been relatively resilient against heavy markdowns in the industry (like premium peer LULU , which missed full price plan in 4Q — adding confidence to ONON's guidance for [gross margins] to expand to 58.5% in '23, and to 60% over the next few years," Binetti wrote.