ON seems worth an add to the LTP:
Here's a comprehensive analysis of ON Semiconductor's current situation and future outlook:
## Recent Earnings Miss
**Q4 2024 Results**
- Revenue: $1.72B (down 14.7% YoY)
- EPS: $0.95 (down 24% YoY)
- Gross margin: 45.3% (down 140 basis points)
- Operating margin: 26.7% (down 490 basis points)
**Segment Performance**
- Power Solutions: $809.4M (down 16.2%)
- Analog & Mixed: $610.6M (down 18%)
- Intelligent Sensing: $302.5M (down 1.7%)
## Key Concerns
**Guidance Disappointment**
- Q1 2025 revenue guidance: $1.35-1.45B vs $1.68B expected
- Q1 EPS guidance: $0.45-0.55 vs $0.88 expected
- Gross margin guidance: 39-41% (significant decline)
**Market Challenges**
- Automotive revenue down 8% YoY
- Industrial revenue declined 16.1%
- Others segment down 31.1%
- Inventory correction continuing longer than expected
## Growth Catalysts
**Silicon Carbide Opportunity**
- Growing demand from EV manufacturers
- Solar energy applications expanding
- Chinese EV market showing strength
- Capacity expansion on track
**Industrial Automation**
- Machine vision applications growing
- Robotics demand increasing
- Factory automation opportunities
- Edge AI implementations
## 2027 Valuation Analysis
**Base Case: $72.47**
- Projected 2027 EPS: $4.83
- Forward P/E: 15x
- Revenue CAGR: 10%
- Margin recovery to 45%+
**Bull Case: $90**
- EPS reaching $6.00
- Multiple expansion to 15x
- Faster SiC adoption
- Market share gains in automotive
**Bear Case: $45**
- EPS stagnating at $3.00
- Multiple compression to 15x
- Continued margin pressure
- Market share losses to competitors
The stock appears oversold at current levels ($48.28) given its strong position in power semiconductors and growing SiC business. However, near-term headwinds in automotive and industrial markets warrant caution until visibility improves.
Citations:
[1] https://www.nasdaq.com/articles/semiconductor-earnings-results-reports-quarterly-earnings
[2] https://www.nasdaq.com/articles/ons-q4-earnings-beat-estimates-revenues-fall-y-y-shares-down
[3] https://lanoticiadigital.com.ar/news-en/on-semiconductors-stocks-dive-to-alarmingly-low-levels-amid-disappointing-forecast/127130/
[4] https://www.perplexity.ai/finance/ON
[5] https://pune.news/market/on-semiconductor-faces-challenges-as-2025-outlook-remains-uncertain-304391/
[6] https://semiwiki.com/semiconductor-services/semiconductor-intelligence/346950-automotive-semiconductor-market-slowing/
[7] https://www.microchipusa.com/industry-news/semiconductor-secrets-whats-coming-in-2025/
[8] https://www.investopedia.com/onsemi-stock-sinks-on-worse-than-expected-results-outlook-8788891
[9] https://news.alphastreet.com/earnings-summary-onsemi-q4-2024-revenue-and-adj-profit-decline-yoy/
[10] https://investor.onsemi.com/news-releases/news-release-details/onsemi-reports-fourth-quarter-and-full-year-2024-results
