Kim Bolton ON Semiconductor ON-Q DON'T BUY Mar 26, 2025

Solid company that is good for long term investors.
Well positioned for increased use of semi-conductors in auto industry.
Very good management team.
Does not own shares but will continue to watch.

They sell chips to the carmakers and many fears an auto strike. He thinks ON is worth the risk, though. Is down 14% this month.

They reported great numbers, but a lot of their business is tired to the industrial sector which many predict will weaken if the economy weakens.

It reported good numbers, but offered weak guidance. That's been happening with some companies lately. A good company, but shares got killed today, its worst day since March 2020.

ON provides sensing and power solutions to the semi-conductor market and has had strong growth for the last two years but this growth looks to be flipping to modest declines on the top-line for 2023 and 2024. Fundamentally, the company looks quite strong and the valuation at 17.8X forward earnings looks fine as well. We wouldn't have a problem with ON but note it might require a bit of patience in the medium term until investors see growth start to reaccelerate.
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Not every semis stock has rallied. Some have lagged due top their end markets. ON serves cars, solar energy and EVs, which went out of style. But investors bet that these end markets could bottom soon. ON management issued conservative guidance recently.

In auto, industrial, edge AI, and AI infrastructure. 12-month price target of $82. Leg in today at $71, $67, and $64. No yield.

It beat earnings today and rallied 11%. The CEO issued a sunny forecast.

Down 17% last month. It got hit after Texas Instruments reported last Monday, giving a dour outlook for the car and industrial end markets.