Investors in ON Semiconductor Corporation (NASDAQ:ON) had a good week, as its shares rose 7.3% to close at US$76.32 following the release of its annual results. ON Semiconductor reported US$8.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.89 beat expectations, being 2.1% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus, from the 29 analysts covering ON Semiconductor, is for revenues of US$7.53b in 2024. This implies a chunky 8.8% reduction in ON Semiconductor's revenue over the past 12 months. Statutory earnings per share are expected to fall 19% to US$4.15 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$8.07b and earnings per share (EPS) of US$4.51 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of US$88.97, suggesting the downgrades are not expected to have a long-term impact on ON Semiconductor's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ON Semiconductor, with the most bullish analyst valuing it at US$115 and the most bearish at US$60.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 8.8% annualised decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ON Semiconductor is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ON Semiconductor. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$88.97, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple ON Semiconductor analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for ON Semiconductor that you should be aware of.

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