ON Semiconductor's Q3 Solid, Analysts Highlight L-Shaped Recovery

Shares of ON Semiconductor Corp (NASDAQ:ON) remained volatile in early trading on Tuesday, even after the company reported upbeat third-quarter revenues.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Needham On ON Semiconductor

Analyst Quinn Bolton maintained a Buy rating, while reducing the price target from $92 to $87.

ON Semiconductor reported "solid" results and guided to a flattish fourth quarter, "as inventory digestion and overall demand weakness persists across its end markets," Bolton said in a note. Management expects an “L-shaped” recovery to continue through the first half of 2025 as "pockets of strength in Automotive and Industrial are not enough to offset overall demand softness," he added.

Data center is "becoming an increasingly exciting opportunity," with ON Semiconductor winning three of the four leading hyperscalers in North America, the analyst said. "These design wins are expected to ramp in 2025," he further wrote.

Goldman Sachs On ON Semiconductor

Analyst Toshiya Hari reiterated a Buy rating, while raising the price target from $89 to $92.

ON Semiconductor's results were better than feared, as strength in the China EV market and resilient demand in select Industrial applications "offset weakness elsewhere," Hari said. Revenues came in at $1.76 billion, up 2% sequentially but down 19% year-on-year, marginally beating expectations, he added.

Management guided to flat revenues for the fourth quarter, below Street expectations heading into the print, the analyst stated. "While the timing and shape of a market recovery remains uncertain, we continue to expect secular growth and through-cycle margin improvement to drive medium- to long-term EPS expansion that materially exceeds the industry average," he further wrote.

Check out other analyst stock ratings.

Benchmark On ON Semiconductor

Analyst David Williams reaffirmed a Buy rating and price target of $90.

Although ON Semiconductor reported results modestly ahead of expectations, its guidance came in "slightly below consensus with ongoing demand weakness and inventory digestion across the Auto and Industrial end markets," Williams said. Although the demand environment remains soft, the company is benefitting from market share gains and content expansion, with new EV design wins ramping into production, he added.

The analyst stated that demand in China is exhibiting strength, while Europe and North America remain soft. SiC remains the bright spot and is expected to grow low to mid-single digits this year despite a ~14% decline in total revenue. “

JPMorgan On ON Semiconductor

Analyst Harlan Sur maintained a Neutral rating and price target of $88.

ON Semiconductor's expectation of an L-shaped recovery is "playing out as expected," Sur said. While the near-term demand outlook "remains muted," there is a broad recovery in China demand, he added.

"ON Semi's commentary is in line with its other broad diversified semiconductor peers and our preview expectations," the analyst wrote. Revenue trends are likely to remain stable through the rest of the year and accelerate in 2025, he further stated.

ON Price Action: Shares of ON Semiconductor were up 0.9% to $72.90 at the time of publication Tuesday.

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