B. Riley Securities has lowered its rating for OnSemi (ON, Financial) from "Buy" to "Neutral," indicating a shift in its assessment of the semiconductor company. The firm also adjusted its price target for OnSemi, reducing it significantly from $73 to $41.
While B. Riley acknowledges OnSemi's management for its strategic emphasis on higher-value initiatives and efforts to cut costs, the firm expressed uncertainty about when the company might see a sustained increase in revenue. This uncertainty has led B. Riley to adopt a more cautious and patient stance regarding potential earnings growth, as noted in their latest analysis.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 25 analysts, the average target price for ON Semiconductor Corp (ON, Financial) is $55.40 with a high estimate of $85.00 and a low estimate of $38.00. The average target implies an upside of 51.30% from the current price of $36.62. More detailed estimate data can be found on the ON Semiconductor Corp (ON) Forecast page.
Based on the consensus recommendation from 32 brokerage firms, ON Semiconductor Corp's (ON, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for ON Semiconductor Corp (ON, Financial) in one year is $57.44, suggesting a upside of 56.85% from the current price of $36.62. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the ON Semiconductor Corp (ON) Summary page.
ON Key Business Developments
Release Date: February 10, 2025
- Full Year Revenue: $7.1 billion.
- Full Year Non-GAAP Gross Margin: 45.5%.
- Fourth Quarter Revenue: $1.72 billion.
- Fourth Quarter Non-GAAP Gross Margin: 45.3%.
- Fourth Quarter Non-GAAP Earnings Per Share: $0.95.
- Automotive Revenue (Q4): $1.03 billion, 8% sequential increase.
- Industrial Revenue (Q4): $417 million, 5% sequential decrease.
- Power Solutions Group Revenue (Q4): $809 million, 2% quarter-over-quarter decrease.
- Analog and Mixed-Signal Group Revenue (Q4): $611 million, 7% quarter-over-quarter decrease.
- Intelligent Sensing Group Revenue (Q4): $303 million, 9% quarter-over-quarter increase.
- Free Cash Flow (Q4): $422 million, 39% sequential increase.
- Cash and Short-term Investments: $3 billion.
- Capital Expenditures (Q4): $157 million, 9% capital intensity.
- Inventory Days: 216 days, including 100 days of strategic builds.
- Q1 2025 Revenue Guidance: $1.35 billion to $1.45 billion.
- Q1 2025 Non-GAAP Gross Margin Guidance: 39% to 41%.
- Q1 2025 Non-GAAP Earnings Per Share Guidance: $0.45 to $0.55.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ON Semiconductor Corp (ON, Financial) achieved a non-GAAP gross margin of 45.5% against revenue of $7.1 billion for the full year 2024.
- The company's automotive revenue increased 8% sequentially in the fourth quarter, driven by share gains and new customer ramps, particularly in China.
- ON Semiconductor Corp (ON) reported significant growth in AI data center and aerospace and defense sectors, with revenue increases of more than 40% and 50% respectively in 2024 over 2023.
- The company successfully closed the acquisition of Qorvo's silicon carbide junction field effect transistor business, enhancing its EliteSiC power solutions.
- ON Semiconductor Corp (ON) introduced the Treo platform, a new analog and mixed-signal platform, which is expected to unlock a $36 billion total addressable market opportunity with up to 70% gross margins.
Negative Points
- Fourth quarter revenue declined to $1.72 billion, with a non-GAAP gross margin of 45.3% and non-GAAP earnings per share of $0.95, impacted by a decline in demand.
- The company experienced a sequential decline in regional revenue, with Japan seeing the sharpest decline, and continued inventory digestion in key end markets.
- ON Semiconductor Corp (ON) anticipates continued volatility in the automotive sector due to geopolitical uncertainty and slower-than-expected EV ramp-up.
- The industrial revenue decreased 5% sequentially, with ongoing weakness in traditional parts of the business and a weak PMI across major regions.
- The company expects a significant decline in automotive revenue in Q1 2025, projected to be down 25% or more sequentially, primarily due to softness in China.
