For a while there, chip stocks like ON Semiconductor (NASDAQ:ON) looked like they were printing gold. With demand far outstripping supply, anyone who could print a chip was proving a winner. However, that’s turned around since, and ON Semiconductor took a beating in Monday afternoon’s trading, shares down over 20% at one point, thanks to an earnings report that failed to impress.
The word out of ON Semiconductor didn’t go well at all, despite the fact that it turned out to be a win, if only a narrow one. ON Semiconductor pulled in earnings of $1.39 per share, which was up against the $1.34 analysts expected. Meanwhile, revenue came in at $2.18 billion, which was, again, ahead of the $2.15 billion estimated, if only just. Projections, meanwhile, were even more of a bust. With expected revenue between $1.95 billion and $2.05 billion, and earnings per share between $1.10 and $1.24, both measures fell short against projections of $2.18 billion in revenue and $1.37 in earnings per share.
That’s when the analysts swung in, with a typical mixed bag. Bank of America, via analyst Vivek Arya, left its Buy rating in place, with plans to review the model after the earnings call. Arya noted that management could be trying to manage expectations, especially considering the general weakness likely to be seen in the auto sector. Meanwhile, Kinngai Chan of Summit Insights dropped ON Semiconductor down to a Hold over concerns about “gross margin pressure.” And with one report from Barron’s just days ago noting that it was a good time to buy in on a “cheap” ON Semiconductor, it’s clear that there’s still a lot of uncertainty and confusion out there.
Is ON Semiconductor Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on ON stock based on three Buys, five Holds and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average ON price target of $115.80 per share implies 74.08% upside potential.
