ON Semiconductor downgraded to Neutral from Outperform at Baird

Baird downgraded ON Semiconductor to Neutral from Outperform with a price target of $60, down from $120. Lead times data suggests a situation of structural oversupply could be unfolding later next year for semiconductor components, which would trigger more broad-based inventory adjustments than we have seen so far as channel inventories remain at 20-plus year-high levels, the analyst tells investors in a research note. As allocation fears dissipate, inventories are poised to decline, bringing more cancellations with likely negative implications for pricing, says the firm. It believes this will eventually settle at pre-COVID levels, resulting in gross margin declines. Bayard downgraded ON Semi, STMicro, and Diodes to Neutral on supply/demand normalization.