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On Semiconductor Corporation (ON), with a market cap of around $32 billion, operates in the semiconductor industry, providing intelligent sensing and power solutions globally. Based in Scottsdale, Arizona, it specializes in power management, analog, and sensor products for automotive, industrial, and consumer markets.
Shares of On Semiconductor have significantly underperformed the broader market over the past 52 weeks. ON has declined 13.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 26.6%. In 2024 alone, shares of ON are down 12.8%, compared to SPX's 11.3% gains on a YTD basis.
Zooming in further, ON is also lagging behind the S&P Semiconductor SPDR's (XSD) 23.8% gains over the past 52 weeks and a 6.3% gain on a YTD basis.
On Semiconductor’s relative underperformance can be attributed to hurdles in the automotive industry, failure to actively capitalize on the artificial intelligence (AI) boom, and grappling with post-pandemic supply and demand fluctuations within the industry. However, the stock rose 4.1% on April 29 after reporting better-than-expected Q1 revenue and EPS results, alongside increased free cash flow.
For the current fiscal year, ending in December, analysts expect ON's EPS to decline by 25.4% to $3.85. However, the company has an excellent earnings surprise history. It beat the consensus estimates in each of the last four quarters.
Despite the stock’s relative underperformance, analysts remain cautiously optimistic about its prospects. Among the 28 analysts covering ON stock, the consensus rating is "Moderate Buy," based on 16 "Strong Buy" ratings, one "Moderate Buy," 10 "Holds," and one "Strong Sell."
This configuration is slightly more bullish than two months before, with 14 analysts suggesting a "Strong Buy."
On May 13, Jefferies Financial Group (JEF) analyst Blayne Curtis gave On Semiconductor a "Strong Buy" rating and raised the price target by 5.3% to $100, citing optimism for a robust upcycle driven by AI. The new target implies a potential upside of nearly 34.6% from the current price levels.
The mean price target of $84.43 represents a premium of 13.7% to ON's current levels. The Street-high price target of $104 suggests that the stock could rally as much as 40%.
On the date of publication, Anushka Mukherjee did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
