Stock Analysis & Ideas

Five-Star Analyst Kevin Cassidy Favors These 2 Semiconductor Stocks

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Five-star analyst Kevin Cassidy has given his views on semiconductor companies’ latest quarterly results. Let us look at two of his top recommendations for the space.

In today’s “Expert Spotlight,” we will look at two top semiconductor picks that senior Rosenblatt Securities analyst Kevin Cassidy is optimistic about. Cassidy is the Managing Director of Rosenblatt Securities and an expert in the semiconductor space. Cassidy has deep experience covering U.S.-based semiconductor stocks and he is highly optimistic about ON Semiconductor (ON) and Qualcomm (QCOM). He has also worked as a semiconductor sales executive before becoming a sell-side analyst in 2006.

Cassidy’s Rank Among TipRanks Experts

According to TipRanks’ Star Ranking System, Cassidy ranks #45 among all 7,991 analysts tracked on TipRanks and #65 among the 21,404 overall experts in the TipRanks universe.

Remarkably, Cassidy has had an overall success rate of 65% with an average return of 23.00% over the past year. Moreover, during the same period, his calls generated an alpha of 11.80% and 6.90% over the S&P 500 (SPX) and the benchmark, respectively.

In his latest semiconductor week review, Cassidy discusses some of the key takeaways from the earnings of last week. The five-star analyst believes that the companies with exposure to high-end markets, including artificial intelligence (AI), 5G, and electric vehicle (EV) automotive, fared much better than the rest.

Notably, he added that the general tone of the earnings last week was “better-than-feared.” With this in mind, let’s look at ON and QCOM in detail.

ON Semiconductor Corp.

ON Semiconductor engages in the design, manufacture, and marketing of a portfolio of semiconductor components. Its offerings include power and signal management, logic, discrete, and custom devices for automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace, and power applications.

ON reported solid second-quarter results, beating both top and bottom-line expectations. The company even gave a robust outlook for the third quarter which was higher than the consensus. The company is riding on the wave of robust demand in the automotive and industrial end markets and sees the momentum continue into the near term.

Cassidy has a Buy rating on ON with a price target of $80, which implies 20.8% upside potential to current levels. Cassidy is particularly impressed that ON increased its “silicon carbide (SiC) revenue expectations for 2023 from a $1B annual run rate exiting 2023 to $1B+ for the full year 2023.”

Notably, Cassidy boasts a success rate of 83% on ON stock with an impressive average return per stock of 45.46%.

Is ON Semiconductor Stock a Buy?

Overall, with 17 Buys and four Holds, ON stock commands a Strong Buy consensus rating on TipRanks. The average ON Semiconductor price target of $74.16 implies 12% upside potential to current levels. Meanwhile, the stock has lost 5.7% so far this year.

Qualcomm, Inc.

Next up is Qualcomm, which creates semiconductors, software, and services related to wireless technology including network equipment, broadband gateway equipment, consumer electronic devices, and other connected devices, as well as in automotive and internet of things (IoT). 

Qualcomm reported outstanding third quarter Fiscal 2022 results. However, the company lowered its guidance for the fourth quarter, citing macroeconomic headwinds. Nonetheless, QCOM continues to enjoy the fruits of its long-standing partnership with Korean electronics giant Samsung to power its mobile phones.

Cassidy has a Buy rating and a $220 price target on QCOM, which implies 49.7% upside potential to current levels.

Cassidy has consistently maintained a Buy rating on the stock since May 2019. Notably, he enjoys a success rate of 83% on QCOM with an average return per stock of 16.44%.

What is the Target Price for Qualcomm?

On TipRanks, QCOM stock has a Moderate Buy consensus rating based on 11 Buys and five Holds. The average Qualcomm price target of $189.85 implies 29.2% upside potential to current levels. Meanwhile, the stock has lost 20.3% so far this year.

The Semiconductor Industry is in an Inventory Correction Phase

Interestingly, Cassidy believes that the inventory correction phase has begun for semiconductor stocks. A majority of the companies reported a cautious tone for 2023, with several lowering their outlook, keeping in line with the macroeconomic backdrop and future expectations.

With so much experience in the semiconductor space and considering his impeachable track record, investors may choose to follow his investment choices in the space to earn reasonable returns. Notably, TipRanks accumulates the recommendations of several Top Experts, which can be considered while making investment choices to maximize returns.

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