Cerity Partners’ Jim Lebenthal Boosts On Holding Stake, Explains Rationale
Jim Lebenthal, Chief Equity Strategist at Cerity Partners, disclosed an increased stake in On Holding and appeared on CNBC’s Halftime Report to discuss his rationale. He detailed factors behind his decision to purchase additional On Holding shares.
1. Jim Lebenthal Increases On Holding Stake
Jim Lebenthal, Chief Equity Strategist at Cerity Partners, disclosed on CNBC’s Halftime Report that he has increased his position in On Holding by approximately 25%, bringing his total holding to roughly 200,000 shares. Lebenthal noted that he initiated his position in January when On Holding shares traded near the lower end of their 52-week range, and has been adding through systematic purchases over the past six weeks. His latest tranche represented about $5 million of stock, reflecting his conviction in the company’s medium-term earnings potential.
2. Bullish Thesis Rooted in Product and Geographic Expansion
Lebenthal emphasized On Holding’s strong third-quarter metrics, citing a 23% year-over-year revenue increase to CHF 350 million, driven by the successful launch of its CloudNova running shoe and the expansion of its retail footprint in Asia-Pacific markets. He highlighted that e-commerce sales accounted for 40% of total revenue in the quarter, up from 32% a year earlier, noting the brand’s direct-to-consumer channel as a key margin driver. Lebenthal also pointed to On Holding’s partnership with two major European soccer leagues, estimating that those sponsorships could boost brand awareness by 15% in priority markets by year-end.
3. Margin Expansion and Path to Profitability
On Holding reported a gross margin of 52% in the third quarter, up 180 basis points from the prior year, supported by favorable product mix and improved manufacturing efficiencies. Lebenthal projects that ongoing supply-chain refinements and higher retail volume will drive margins above 55% by mid-2025. He forecasts that On Holding can achieve positive free cash flow in the next four quarters, citing the company’s CHF 220 million cash balance as sufficient funding for its planned store openings and marketing investments.
4. Risk Considerations and Catalysts
While Lebenthal’s outlook is bullish, he acknowledged risks including potential footwear inventory buildups if consumer demand slows and intensifying competition from established athletic brands. Key catalysts he identified include the holiday season rollout of On Holding’s new hybrid performance line, scheduled for November, and the planned opening of five flagship stores in North America and Europe in the first half of 2025. He believes that successful execution on these fronts could drive a 30% increase in On Holding’s enterprise value over the next 12 months.