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Investing.com - UBS 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 manufacturer. The stock, currently trading at $47.49, has declined nearly 18% in the past week, according to InvestingPro data.
The downward revision follows what UBS described as a "downtick on nearly every front" for ON Semiconductor, including increased revenue and gross margin headwinds expected in 2026 and a much slower recovery than previously anticipated. The company’s revenue has already declined by 17.9% over the last twelve months, though it maintains strong financial health with a current ratio of 5.02.
UBS identified pricing pressure as a significant concern, noting that ON Semiconductor appears to be experiencing more acute challenges than its peers as the company attempts to minimize market share losses.
The firm highlighted a structural shift in ON Semiconductor’s silicon carbide (SiC) business in China as the "biggest issue," with customers transitioning from buying modules to an ODM (Original Design Manufacturer) model where they purchase only semiconductor dice, which significantly reduces ON’s revenue and complicates capacity utilization across its fabrication facilities.
Based on these factors, UBS adjusted its earnings per share forecasts, slightly raising its 2025 estimate but lowering its 2026 projection from $3.73 to $2.92 and its 2027 forecast from $5.39 to $4.58. Trading at a P/E ratio of 43.8, InvestingPro analysis suggests the stock is currently undervalued, with 14+ additional exclusive insights available to subscribers.
In other recent news, ON Semiconductor has been the focus of several analyst updates following its second-quarter earnings report. The company reported revenue of $1.47 billion, marking a 1.6% increase from the previous quarter but a 15.4% decrease year-over-year. Stifel maintained its Hold rating with a $50 price target, noting the revenue exceeded their estimate by 1.3% and highlighted early signs of stabilization. Meanwhile, Needham raised its price target to $58, maintaining a Buy rating, citing solid results and guidance that exceeded expectations. Mizuho (NYSE:MFG) adjusted its price target to $68, keeping an Outperform rating, despite noting a slight decline in gross margins. BofA Securities downgraded ON Semiconductor from Buy to Neutral, lowering the price target to $56 due to concerns about the company’s recovery trajectory and reliance on the Chinese electric vehicle market. Lastly, Goldman Sachs reiterated its Neutral rating with a $60 price target, following results that aligned with market expectations. These developments reflect a range of perspectives on the company’s financial health and future prospects.
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