ON Semiconductor Braces for Earnings Announcement amid Market Struggles
Scottsdale, Arizona-based ON Semiconductor Corporation (ON) specializes in intelligent sensing and power solutions, focusing on analog, standard logic, and discrete semiconductors. With a market valuation of $26.7 billion, the company produces integrated circuits, analog ICs, and a variety of surface mount packages. Investors are keenly awaiting the announcement of fiscal fourth-quarter earnings for 2024, which is set for Monday, Feb. 3.
Analyst Expectations for Upcoming Earnings
Leading up to the earnings report, analysts forecast that ON will post a profit of $0.99 per share on a diluted basis. This reflects a decline of 20.8% compared to $1.25 reported in the same quarter last year. Remarkably, the company has consistently surpassed Wall Street’s earnings per share (EPS) estimates in its last four quarterly reports.
Annual Financial Projections
For the entire fiscal year, analysts predict that ON will report an EPS of $4, down 22.5% from $5.16 in fiscal 2023. However, there is optimism for fiscal 2025, with expectations that EPS will bounce back by 9.5% to approximately $4.38 year over year.
Stock Performance and Market Conditions
ON’s stock has significantly lagged behind the S&P 500’s ($SPX) impressive 24.2% gains over the past 52 weeks, with shares dropping 25.2% during the same period. The company also fell short of the performance of the Technology Select Sector SPDR Fund (XLK), which rose by 23.9% in the past year.
Challenges Contributing to Underperformance
This decline can be traced back to vulnerabilities in essential markets and the impact of high interest rates, which have adversely affected car sales and production. Compounding these issues, a slowdown in the electric vehicle (EV) market prompted management to reduce its estimate for silicon carbide chips.
Recent Q3 Results and Q4 Forecast
On Oct. 28, shares of ON rose by more than 1% following the release of its Q3 results. The adjusted EPS was reported at $0.99, exceeding analysts’ expectations of $0.97. Revenue also topped estimates, reaching $1.76 billion compared to the forecasted $1.75 billion. For Q4, the company anticipates an adjusted EPS in the range of $0.92 to $1.04, with revenue expected between $1.7 billion and $1.8 billion.
Analysts’ Outlook on ON Stock
The consensus among analysts regarding ON stock is moderately bullish, assigning it a “Moderate Buy” rating overall. Out of the 31 analysts monitoring the stock, 17 advocate for a “Strong Buy,” one suggests a “Moderate Buy,” 11 give a “Hold,” while one each recommends a “Moderate Sell” and a “Strong Sell.” The average price target among analysts is $86.35, which would translate to a potential upside of 48.1% from current prices.
On the date of publication, Neha Panjwani 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
