Stock Analysis: ON Semiconductor Corp (NASDAQ: ON)
Introduction
ON Semiconductor Corp, also known as
Onsemi, is a leading player in the semiconductor space, supplying power and sensing solutions globally. The company is strategically positioned within high-growth sectors including automotive, industrial applications, artificial intelligence (AI), and the Internet of Things (IoT).
Share Price Overview
- Current Price: $44.62
- Market Cap: $18.65 Billion
- 52-Week Range: $31.04 – $80.08
Onsemi stock recently confirmed a bottom in late April and has begun to recover, offering an attractive
risk-to-reward opportunity. Despite a challenging macro environment and recent earnings dip, there are encouraging signs that the business is stabilizing.
Financial Performance – Q1 2025
Revenue and Profitability
- Revenue declined by 22% YoY in Q1, with all major segments contracting:
- PSG: -26%
- ISG: -20%
- AMG: -19%
- Margins were significantly impacted, yet results still beat analyst expectations.
Cash Flow and Capital Returns
- Cash from Operations: $602 million (over 40% of revenue)
- Free Cash Flow (FCF): $455 million, up 70% YoY
- Onsemi used over 60% of FCF for share buybacks, reducing outstanding shares by:
- 1.9% sequentially
- 3.5% YoY
Guidance
The company expects
Q2 revenue around $1.45 billion, signaling stabilization with a slower contraction of 16% (vs. 22% in Q1). Management expressed confidence in continued progress across all end markets.
Valuation & Growth Drivers
- P/E Ratio: ~17x (lower on a forward basis)
- Valuation remains attractive given Onsemi's exposure to:
- Electric vehicles and autonomous driving
- Industrial automation
- AI hardware demand
- IoT applications
Despite macroeconomic headwinds, these sectors are poised for accelerated growth, positioning Onsemi for a
strong rebound from 2026.
Analyst & Institutional Sentiment
- Analyst sentiment remains neutral to bullish, with a Hold rating and 45% upside potential based on consensus.
- Q1 and Q2 guidance could halt the recent trend of lowered price targets and prompt upgrades, supporting upward price movement.
- Institutional investors sold in Q1 2025 but resumed buying in Q2, indicating confidence in a bottoming out of the stock.
Balance Sheet & Investor Value
While total equity fell 1.6% in Q1 (mainly due to repositioning and buybacks), Onsemi's:
- Strong cash flow
- Low leverage
- Continued buybacks
...all contribute to growing
per-share value and investor leverage over time.
✅ Conclusion
Onsemi (ON) appears to have bottomed, with fundamentals showing signs of recovery. Despite recent headwinds, improving cash flow, strategic market exposure, and resumed institutional interest all suggest a
favorable long-term investment case. If growth resumes as expected in 2026, the stock could deliver
double-digit gains within the year.
