Piper Sandler remains bullish on ON Semiconductor following ‘solid results’

Piper Sandler analyst Harsh Kumar notes ON Semiconductor reported results that largely exceeded expectations for the quarter as well as the guide. In general, ON is benefiting from "tremendous execution" in the silicon carbide space where business nearly doubled on a sequential basis in the March quarter, the firm adds. Despite small negative movements in the broader automotive end markets, the growth of the silicon carbide business will likely ensure that ON delivers growth in the core parts of industrial and automotive business through 2023, Piper argues. The firm further notes that ON appears to be at the peak of a gross margin headwind as both silicon carbide as well as the East Fishkill facility are at maximum headwind. These should alleviate towards the end of 2023. Piper sees ON as a core automotive player delivering both growth in the future and a gross margin upside proposition. It has an Overweight rating on the shares with a price target of $85.