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On Tuesday, Stifel analysts maintained a Hold rating on ON Semiconductor (NASDAQ:ON) but reduced the stock’s price target from $60.00 to $52.00. The decision comes after an evaluation of the company’s financial results, which Stifel believes align with the current expectation for companies with high exposure to cyclical trends to face near-term (NT) challenges. These challenges are attributed to the difficult macroeconomic environment, especially in key sectors such as Automotive and Industrial, which combined for 84% of ON Semiconductor’s sales in the fourth quarter of 2024. According to InvestingPro data, the stock has declined 41.78% over the past year and is currently trading near its 52-week low of $46.57, with technical indicators suggesting oversold conditions.
Stifel’s analysis suggests that while there is a positive long-term (LT) outlook for ON Semiconductor’s strategic positioning, there are ongoing concerns about macroeconomic factors that could continue to impact the company’s revenue and margins. The revised 12-month price target of $52.00 reflects these concerns and is based on a 15.7 times the calendar year 2026 estimated price-to-earnings (P/E) multiple. Currently trading at a P/E ratio of 14.12x and with a market capitalization of $20.03 billion, InvestingPro analysis indicates the stock is trading below its Fair Value, with 14 additional ProTips available to subscribers.
ON Semiconductor’s recent performance indicates that the company is navigating through a period of economic instability that is affecting its primary markets. Despite this, Stifel’s analysts see potential in the company’s long-term prospects. The Hold rating indicates that they do not recommend buying or selling the stock at this time, but investors should keep an eye on the company’s progress. The company maintains a GOOD overall financial health score according to InvestingPro’s comprehensive analysis, which includes detailed metrics and expert insights available in the Pro Research Report.
The adjusted price target suggests that Stifel anticipates a potential for growth in ON Semiconductor’s stock value, albeit at a more conservative estimate than previously projected. The new target is a reflection of the current economic pressures and the firm’s cautious stance on the stock’s near-term growth prospects.
Investors and stakeholders in ON Semiconductor will likely monitor how the company adapts to the challenging macro backdrop and whether it can leverage its strategic positioning to overcome near-term headwinds. The lowered price target serves as a revised benchmark for evaluating the company’s stock performance moving forward.
In other recent news, ON Semiconductor has been the subject of several adjusted outlooks from various financial firms. Loop Capital Markets reduced its price target for the company from $95 to $75, while maintaining a Buy rating, following the company’s earnings report that fell short of fourth-quarter 2024 expectations. Rosenblatt Securities also lowered its price target for ON Semiconductor to $49, maintaining a Neutral rating, citing uncertainties including geopolitical issues and fluctuating end-user demand.
Morgan Stanley (NYSE:MS) joined the trend, reducing its price target from $52 to $44, expressing concern about the sustainability of recent improvements in the company’s gross margins. Needham set a new price target of $57, down from $66, while sustaining a Buy rating on the stock, in response to ON Semiconductor’s lower-than-expected forecast for the first quarter of 2025 due to demand weakness and inventory issues. Lastly, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for the company, reducing the price target from $85 to $71, while retaining an Outperform rating, despite near-term challenges and limited customer visibility.
These recent developments reflect the current state of the market and the company’s position within it. Despite the lowered forecasts, the long-term perspective remains positive, as evidenced by the maintained Buy and Outperform ratings from several firms. The companies’ analyses suggest that for ON Semiconductor to see a revenue re-acceleration, there would need to be a significant boost in demand that hinges on broader economic conditions.
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