Strategic Adjustments and Sector Recovery Justify Buy Rating for ON Semiconductor

Needham analyst Quinn Bolton has maintained their bullish stance on ON stock, giving a Buy rating yesterday.

Quinn Bolton has given his Buy rating due to a combination of factors that highlight both challenges and opportunities for ON Semiconductor. Despite the pressure on gross margins (GM) from competitive pricing and under-absorption charges, the company is taking strategic actions to mitigate these impacts. By reducing manufacturing capacity and implementing a reduction in force, ON Semiconductor aims to improve its gross margin for each point of utilization as revenue recovers.
Additionally, the industrial sector is showing signs of recovery, with growth in aerospace and defense, medical, and consumer industrial segments, as well as stabilization in traditional industrial markets. These positive developments, along with the company’s strategic adjustments, contribute to the optimistic outlook, justifying the Buy rating. Although the price target has been adjusted to $50, the unchanged valuation multiple reflects confidence in the company’s long-term potential.

According to TipRanks, Bolton is a 5-star analyst with an average return of 12.3% and a 44.56% success rate. Bolton covers the Technology sector, focusing on stocks such as Monolithic Power, ON Semiconductor, and Vicor.

In another report released yesterday, Bank of America Securities also maintained a Buy rating on the stock with a $48.00 price target.