Wall Street Analysts See On Holding (ONON) as a Buy: Should You Invest?

Core Viewpoint - Analyst recommendations play a significant role in influencing stock prices, but their reliability is questionable due to potential biases from brokerage firms [1][5][10]. Summary by Sections Analyst Recommendations - On Holding (ONON) has an average brokerage recommendation (ABR) of 1.48, indicating a consensus between Strong Buy and Buy, based on 24 brokerage firms [2]. - Out of the 24 recommendations, 17 are Strong Buy and 3 are Buy, which represent 70.8% and 12.5% of the total recommendations respectively [2]. Limitations of Brokerage Recommendations - Relying solely on ABR for investment decisions may not be wise, as studies indicate limited success in guiding investors towards stocks with the highest price increase potential [5]. - Brokerage analysts often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [6][10]. Zacks Rank as an Alternative - Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which are more reliable indicators of near-term stock performance [8][11]. - The Zacks Rank is distinct from ABR; while both are on a scale of 1 to 5, Zacks Rank is a quantitative model reflecting earnings estimates, whereas ABR is based on brokerage recommendations [9][12]. Current Earnings Estimates for On Holding - The Zacks Consensus Estimate for On Holding remains unchanged at $0.76 for the current year, suggesting stable analyst views on the company's earnings prospects [14]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for On Holding, indicating a cautious approach despite the Buy-equivalent ABR [15].