Wells Fargo Upgrades ON Semiconductor On EV Prospects

ON Semiconductor Corp (NASDAQ: ON) has the opportunity to become one of the leading suppliers of silicon carbide (SiC) power devices to the electric vehicle market, according to Wells Fargo.

The ON Semiconductor Analyst: Gary Mobley upgraded the rating for ON Semiconductor from Equal-Weight to Overweight, while raising the price target to $65.

The ON Semiconductor Thesis: After the recent pullback, the stock is trading at a “significant discount” to historical levels as well as to the chip section and its valuation is attractive, Mobley wrote in the note.

On Semiconductor is focusing on ramping its automotive and industrial revenues and both these segments are accretive to margins in the long term, the analyst stated.

“ON fits with our automotive super cycle these (e.g. the extended cyclical recovery in light vehicle production as well as the chip content growth as driven by EVs),” he wrote.

ON Semiconductor is on track to doubling its SiC revenues in fiscal 2022 and these revenues could reach “$1.0B annualized pace exiting FY23,” Mobley added.

ON Price Action: Shares of ON Semiconductor traded higher by 1.5% to $52.55 at the time of publication Thursday.