EXEC: Raymond James Upgrades On Holding, Downgrades Deckers Ahead of Earnings

Why It Matters

The rating changes signal shifting risk‑reward dynamics ahead of earnings, guiding investors on two apparel stocks with divergent near‑term catalysts. On’s upgrade suggests upside potential, while Deckers’ downgrade tempers expectations despite a bullish outlook.

Key Takeaways

• On Holding upgraded to Strong Buy as pullback deemed overdone
• Stock down 16% since March 3 Q4 report, now seen upside
• CEO transition viewed as non‑disruptive; co‑founders retain control
• Deckers rating cut to Outperform, price target held at $133
• Analyst expects Deckers Hoka growth mid‑teens, Ugg flat but DTC strong

Pulse Analysis

Raymond James’ decision to lift On Holding (ONON) to a Strong Buy reflects a broader market tendency to reward companies that demonstrate resilient fundamentals amid leadership changes. Patel’s analysis points to a 16% price dip that he believes was driven more by investor nervousness over CEO Martin Hoffman’s exit than by any material operational weakness. The firm’s co‑founders remain at the helm, and data from Google Trends and mobile app usage suggest demand is accelerating. Coupled with planned price increases in July 2025 and a robust direct‑to‑consumer (DTC) channel, On is positioned to outpace its 2026 revenue guidance, targeting more than 23% growth excluding foreign‑exchange effects.

Conversely, Deckers Outdoor (DECK) received a rating downgrade to Outperform, though the analyst retained a bullish stance and a $133 price target. The adjustment stems from valuation concerns rather than a fundamental shift in outlook. Patel anticipates Hoka’s fourth‑quarter sales to grow in the mid‑teens, buoyed by earlier‑than‑expected DTC momentum, while Ugg is projected to be flat due to a strategic wholesale timing shift. Tariff pressures may compress gross margins, but the firm’s ability to mitigate these costs and control SG&A could preserve profitability. The guidance remains conservative, positioning Deckers to potentially exceed expectations if its channel mix continues to improve.

These rating moves arrive just weeks before both companies report earnings, a period that often amplifies stock volatility. For investors, the upgrade underscores On’s upside upside potential as it navigates post‑CEO transition and leverages pricing power, while the downgrade serves as a cautionary note on Deckers’ valuation despite solid DTC trends. Monitoring metrics such as DTC sales growth, tariff impact on margins, and the execution of price hikes will be critical in assessing whether the analysts’ forecasts materialize, influencing portfolio allocations across the broader apparel and footwear sector.