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ON Semiconductor Beats 4Q Estimates; Shares Jump 6%

Shares of ON Semiconductor closed 6.4% higher on Monday after the US chipmaker reported 4Q results that topped analysts’ expectations amid robust demand for its automotive products.

ON Semiconductor’s (ON) 4Q adjusted earnings surged 16.7% to $0.35 per share year-over-year and beat Street estimates of $0.28. Its revenues increased 3% to $1.45 billion and surpassed the consensus mark of $1.36 billion.

The semiconductor supplier’s quarterly results benefited from an improvement in the global macroeconomic environment and recovery in the automotive end-market. (See ON Semiconductor stock analysis on TipRanks)

For 1Q, ON Semiconductor forecasted revenues between $1.41 billion to $1.51 billion.

Following the earnings release, Mizuho Securities analyst Vijay Rakesh raised the stock’s price target to $40 (9% upside potential) from $39 and reiterated a Buy rating.

In a note to investors, Rakesh wrote, “With its strong automotive position, new CEO focused on accretive growth, tight supply, Product & Foundry repositioning, and an activist investor, we see ON well positioned.”

Overall, the Street has a bullish outlook, with a Strong Buy consensus rating based on 13 Buys, 1 Hold, and 1 Sell. The average analyst price target of $39.71 implies upside potential of about 8.2% to current levels. Shares have gained 58.6% in the past year.

Meanwhile, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in ON is currently Very Negative as 8 hedge funds trimmed their cumulative holdings of the stock by 1.2 million shares in the last quarter.

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