Tuesday, KeyBanc adjusted its price target for ON Semiconductor (NASDAQ:ON), reducing it to $90 from the previous $100, while maintaining an Overweight rating on the stock.
The firm's decision followed the company's first-quarter earnings report, which slightly exceeded market expectations. However, ON Semiconductor forecasted a lower second quarter, attributing the decline to a correction in the automotive and industrial end markets.
ON Semiconductor announced its first quarter results, which revealed a modest outperformance compared to forecasts. Nonetheless, the company's guidance for the second quarter was less optimistic, expecting a downturn due to adjustments in specific sectors.
Despite this, ON Semiconductor observed signs of stabilization within the traditional segment of its industrial business. The company also expressed confidence in the continued growth of the Silicon Carbide (SiC) Total Addressable Market (TAM) for the current year. It reaffirmed its projection to double its growth based on securing design wins and capturing market share.
The analyst from KeyBanc noted that the first-quarter results were better than feared, which provides a basis for their continued positive rating. The firm's stance is buoyed by ON Semiconductor's expectation of growth despite the downward revision of its second-quarter guidance. This growth is anticipated to be driven by the company's achievements in design wins and market share expansion.
In summary, KeyBanc has revised its price target for ON Semiconductor to $90, down from $100, but remains bullish on the stock with an Overweight rating. The firm acknowledged the current market corrections but is encouraged by signs of stabilization and growth prospects in the SiC market, as well as ON Semiconductor's strategic gains.
InvestingPro Insights
Following KeyBanc's adjustment of ON Semiconductor's price target, it's crucial to consider real-time metrics and insights from InvestingPro that could further inform investors' decisions. ON Semiconductor currently has a market capitalization of $30.44 billion, indicating a significant presence in the industry. Despite recent market corrections, the company's adjusted P/E ratio for the last twelve months as of Q1 2024 stands at 13.86, which suggests it is trading at a low price relative to its near-term earnings growth potential.
InvestingPro Tips highlight that analysts have recently revised their earnings expectations downwards for the upcoming period, reflecting the cautious outlook shared by ON Semiconductor for Q2. Nevertheless, the company maintains a strong position within the Semiconductors & Semiconductor Equipment industry, and analysts predict it will remain profitable this year. Additionally, with a significant return over the last week of 14.82%, the stock has demonstrated resilience in the short term.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/ON. By using the coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking an array of detailed insights to refine their investment strategy. With the market's dynamic nature, these insights could prove invaluable for remaining informed and agile in response to industry trends.
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