D-Wave Quantum falls nearly 3% as earnings miss overshadows revenue beat
Investing.com - Rosenblatt lowered its price target on ON Semiconductor (NASDAQ:ON) to $50.00 from $55.00 on Tuesday, while maintaining a Neutral rating on the semiconductor company’s stock. The stock, which has declined nearly 18% in the past week, currently trades at a P/E ratio of 43.5x. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate.
The price target reduction follows ON Semiconductor’s second-quarter results, which beat expectations, and third-quarter guidance that came in above Street consensus. Despite these positive results, the company’s forecast of slightly lower quarter-over-quarter non-GAAP gross margins drove shares lower.
Rosenblatt noted that investor focus remains on gross margin expansion, with ON Semiconductor management taking a cautious approach to increasing utilization rates. The company is waiting for stronger signs of recovery in its end markets before boosting production capacity.
The firm highlighted that ON Semiconductor is seeing signs of stabilization in end markets, which represents a positive step toward increased utilization rates. Additionally, the company’s AI data center business is experiencing a robust pipeline of opportunities.
Rosenblatt’s new $50 price target is based on a 15x multiple applied to next twelve months non-GAAP earnings per share, with the firm citing continued gross margin pressure as a factor tempering the bull case for ON shares.
In other recent news, ON Semiconductor has been the focus of several analyst updates and developments. The company reported solid results for the June quarter and provided guidance for the September quarter that slightly exceeded the consensus of $1.50 billion in revenue, although gross margins are expected to decline by 10 basis points. Mizuho (NYSE:MFG) lowered its price target for ON Semiconductor to $68 from $72, maintaining an Outperform rating, citing soft margins. Meanwhile, TD Cowen reduced its price target to $55 from $68, maintaining a Buy rating, due to company-specific headwinds and stagnant gross margins. UBS also lowered its price target to $50 from $55, expressing concerns over the SiC business and a slower-than-expected recovery, while maintaining a Neutral rating. BofA Securities downgraded the stock from Buy to Neutral, lowering the price target to $56 from $70, pointing to a weak recovery outlook and missed industrial sales targets. In contrast, Needham raised its price target to $58 from $50, citing solid results and guidance that exceeded expectations, suggesting a potential recovery phase. These developments reflect a range of perspectives on ON Semiconductor’s future performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.