BofA downgraded On Semi (ON) to Neutral from Buy with a price target of $56, down from $70. The company’s Q2 earnings painted a picture of a “muted” sales recovery, continued weakness in U.S. and European autos, increasing reliance on China EVs and limited to no gross margin recovery for several quarters, the analyst tells investors. While the firm still believes ON “offers the most EPS leverage in the industry” and is executing on “an interesting data center opportunity,” it sees the shares as potentially range-bound given the recovery timing and the view that data center growth “isn’t likely to shine” until the second half of next year.
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