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ON Semiconductor Corporation (ON), headquartered in Scottsdale, Arizona, is a prominent player in the semiconductor industry. Valued at a market cap of $30.8 billion, the company focuses on intelligent sensing and power solutions, offering a diverse portfolio of discrete and embedded semiconductor components.
Shares of ON have underperformed the broader market over the past 52 weeks. ON has dipped 7.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 36.4%. In 2024, ON is up 1.8%, compared to SPX's 25.2% gain on a YTD basis.
Zooming in further, ON has also underperformed the Semiconductor Select SPDR Fund's (XSD) 37.8% returns over the past 52 weeks. Moreover, ON lags behind the exchange-traded fund's 11% gain on a YTD basis.
Despite underperforming the broader market over the past year, ON Semiconductor saw a strong performance on Nov. 6, rallying over 3% along with gains across the broader chip sector.
On Oct. 28, ON reported its Q3 earnings, and the stock rose 3.4% in the following trading session. It reported an adjusted net income of $0.99 per share, beating Wall Street's $0.97 forecast. Revenue reached $1.76 billion, slightly above expectations of $1.75 billion. For Q4, ON projects adjusted earnings of $0.92–$1.04 per share and revenue between $1.71 billion and $1.81 billion.
For the current fiscal year, ending in December, analysts expect ON’s EPS to decline 22.4% year over year to $4. The company's earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 29 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buys,” one “Moderate Buy,” 11 “Holds,” one “Moderate Sell,” and one “Strong Sell.”
This configuration is slightly less bullish than three months before, with 16 analysts suggesting a "Strong Buy."
On October 28, Truist Financial Corporation (TFC) analyst William Stein lowered On Semiconductor’s price target from $97 to $89, maintaining a “Buy” rating after a mixed Q3. Stein notes that On Semiconductor is still set for double-digit EPS growth and sees its shares as undervalued compared to similar analog semiconductor stocks.
The mean price target of $86.56 represents a premium of 20.1% to ON's current levels. The Street-high price target of $107 suggests that the stock could rally as much as 48.5% from the prevailing market prices.
On the date of publication, Kritika Sarmah 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.
