ON Semiconductor (ON – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Gary Mobley from Wells Fargo maintained a Buy rating on the stock and has a $95.00 price target.
Gary Mobley has given his Buy rating due to a combination of factors relating to the current valuation of ON Semiconductor and its strategic positioning within the market. Despite recent underperformance and a potential short-term dip in demand, particularly from Tesla’s decline in silicon carbide (SiC) demand, Mobley believes the stock is undervalued. ON’s shares are trading at approximately 14 times next twelve months (NTM) earnings, which is below the five-year median of 17 times. Additionally, compared to its peers in the Semiconductor Index (SOX), ON’s shares appear cheap, suggesting a good entry point for investors as future revenue is expected to inflect upward.
Furthermore, Mobley’s optimism is fueled by ON Semiconductor’s strong position in the SiC supply chain and its significant market share gains in the power device market. The company’s leading camera image sensor business, worth around $1.0 billion annually, positions it to benefit from increased advanced driver-assistance systems (ADAS) and autonomous driving (AD) penetration in the automotive industry. Although the overall market growth for SiC might be revised downward due to Tesla’s production softness, ON Semiconductor is still expected to grow at twice the rate of the overall SiC market. Additionally, Mobley anticipates that any negative revisions to forecasts might already be priced in and that the company is likely to return to modest sequential growth after another quarter.
According to TipRanks, Mobley is a 5-star analyst with an average return of 10.2% and a 53.62% success rate. Mobley covers the Technology sector, focusing on stocks such as NXP Semiconductors, ON Semiconductor, and Synopsys.
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ON Semiconductor (ON) Company Description:
ON Semiconductor Corp. engages in the design, manufacture, and marketing of portfolio of semiconductor components. It operates through the following segments: Power Solutions Group, Advanced Solutions Group, and Intelligent Sensing Group. The Power Solutions Group segment offers discrete, module, and semiconductor products that perform multiple application functions, including power switching, power conversion, signal conditioning, circuit protection, signal amplification, and voltage reference functions. The Advanced Solutions Group segment designs and develops analog, mixed-signal, advanced logic, ASSPs and ASICs, Wi-Fi and power solutions for a broad base of end-users in the automotive, consumer, computing, industrial, communications, medical and aerospace/defense markets. The Intelligent Sensing Group segment includes designs and develops CMOS and CCD image sensors, as well as proximity sensors, image signal processors, single photon detectors, including SiPM and SPAD arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in the automotive, industrial, consumer, wireless, medical and aerospace/defense markets.. The company was founded on August 4, 1999 and is headquartered in Phoenix, AZ.
