The management of analog chips maker ON Semiconductor (ON) have “tough questions” to answer after it suffered an NFL like “sack” in Q4.
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Guidance Was “Worse than Feared”
TD Cowen’s Joshua Buchalter cut his price target on ON stock to $55 from $65, but kept a Buy rating after ON reported that Q4 revenues and earnings had been hit by weaker auto and industrial demand missing forecasts. But it was more ON’s revenue guidance for the first quarter of 2025 of $1.4 billion, down on expectations of $1.6 billion, which discouraged Buchalter. He called the guidance “worse than feared.”
Still full of Super Bowl spirit, Buchalter said ON had been “sacked in the fourth quarter of a cycle that’s left all battered and bruised.” But, he added: “We struggle to reconcile management’s commentary on an acute deterioration of demand versus peers, who have noted demand is neither getting appreciably better nor worse. It has warranted tough questions for management.”
Data Centers Provide Long-Term Hope
Four-and-a-half-star TipRanks rated analyst Vijay Rakesh of Mizuho has a $71 price target on the stock and a Buy rating. He also highlighted near-term demand headwinds such as customers inventories being “elevated” but in the long-term said ON had momentum. This was especially evident in demand from data centers as more corporates adopt cloud and AI technology, as well as the continued adoption of electric vehicles despite slowing growth. ON’s shares, which closed 8% lower on Monday, were flat in pre-market trading.
Is ON a Good Stock to Buy?
On TipRanks, ON has a Moderate Buy consensus based on 13 Buy, 6 Hold and 1 Sell rating. Its highest price target is $107. ON stock’s consensus price target is $69.37 implying an 47.47% upside.
