Robert W. Baird analyst Tristan Gerra has maintained their neutral stance on ON stock, giving a Hold rating yesterday.
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Tristan Gerra has given his Hold rating due to a combination of factors affecting ON Semiconductor’s performance. The company’s gross margin is struggling to recover, largely due to its exposure to silicon carbide (SiC), while many of its peers are experiencing a rebound. The industrial and automotive sectors underperformed in the second quarter, falling short of company expectations, which management attributes to product pruning. However, earlier pricing strategies may have negatively impacted market share.
In the SiC segment, a significant portion of the volume is sourced from China, indicating weak Tesla orders and an unfavorable product mix. Additionally, the company’s capacity utilization rates have increased but remain below full capacity, suggesting a prolonged recovery period. Long-term supply agreements (LTSAs) are slightly reduced but still substantial, with potential pricing pressures as these agreements may not be renewed. These factors collectively contribute to the Hold rating, with a price target set at $48.
In another report released yesterday, Goldman Sachs also reiterated a Hold rating on the stock with a $60.00 price target.