ON Semiconductor Corp (NASDAQ: ON) has been making waves in the stock market with a daily gain of
4.25%, and a 3-month gain of 12.73%. As well, it’s Earnings per Share (EPS)
stands at 4.37.
Technology-focused investors are excited about ON
Semiconductor's silicon carbide technology. Industrial-focused investors are
very interested in the company's focus on growing its intelligent power and
sensing technology in key end markets like automotive (with a heavy focus on
electric vehicles, or EVs) and industrial automation.
These end markets definitely make ON Semiconductor not
the usual semiconductor conductor with heavy exposure to highly cyclical
markets like consumer electronics.
The growth in EVs and industrial automation not only
affords the company exciting secular growth markets but also offers an
opportunity to expand revenue as these technologies use substantially more ON
ON Semiconductor exhibits strong financial health and
profitability. Its growth ranks better than 72.4% of 768 companies in the
Why the ON Weekly
Options Trade was Originally Executed!
ON Semiconductor Corp (NASDAQ: ON), the auto and industrial chip specialist, could see
accelerating growth and profit expansion in the near future.
While the stock is up more than 50% this year, it pulled
back recently after its earnings report, and amid the general tech sector
ON Semiconductor became profitable within the last three
years. That kind of transition can be an inflection point that justifies a
strong share price gain.
The ON Weekly
Options Trade Explained.....
** OPTION TRADE: Buy ON
SEP 08 2023 95.000 CALLS - price at last close was $1.63 - adjust accordingly.
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken.
Entered the ON Weekly Options (CALL) Trade on Monday, August 21, 2023, for $2.00.
Sold the ON weekly options contracts on Tuesday, August 29, 2023 for $4; a potential profit of 100%.
Don’t miss out on further trades – become a
Further Catalysts for the ON Weekly Options Trade…..
There are potential
catalysts on the horizon that could propel results skyward.....
carbide (SiC) is set for blockbuster growth in the years ahead. A material with
high heat resistance and conductivity SiC is perfect for electric vehicles and
infrastructure. Only a handful of players are investing in the novel material
today in a big way and these companies could be set for big profits a few years
out. One is On Semiconductor.
probably been the fastest to ramp up its own SiC chip output. It was able to
convert its existing fabs and expand them to accommodate SiC, rather than
having to build entirely new fabs from scratch, as, say, Wolfspeed is doing.
chips are ramping up in earnest and are somewhat complex to make, SiC margins
are currently lower than the company's overall gross margins. However, that
will eventually change, and ON's second quarter showed notable progress on that
second quarter, ON's SiC revenue grew a whopping fourfold over the prior-year
quarter, while SiC gross margins doubled quarter over quarter. Importantly, Q2
also marked the first profitable quarter for the SiC business, achieving a
"high-teen" operating margin even with startup costs factored in.
That's quickly making progress toward ON's total 32.8% adjusted (non-GAAP)
operating margin last quarter, which itself was dragged down because that very
SiC revenue made up a larger part of the business.
eventually expects SiC revenue to exceed the company average, helping On reach
its longer-term goal of 53% gross margins, up from 49.2% in 2022, along with
operating margins of 40% by 2027.
should expect SiC revenue to grow aggressively, as ON booked $3 billion of
silicon carbide revenue under long-term service agreements (LTSAs) in the
second quarter alone, bringing the lifetime total for SiC LTSAs to $11 billion.
For reference, ON made $8.3 billion in total revenue last year.
several customers have even made pre-payments under some of that LTSA total,
further de-risking that future revenue. And on the conference call with
analysts, CFO Thad Trent said he expects SiC margins to be at the corporate
average by the end of the year.
positioned itself as an AI stock, rather concentrating on the attractive
automotive and industrial chip markets. But power efficiency isn't just a theme
for electric vehicles and infrastructure; it's also important to AI servers,
which suck up huge amounts of energy.
At its March
Analyst Day, management put forward the prospect of increasing content in AI
servers in the future, and it provided more color on the second-quarter call.
Even though it doesn't make AI processors, accelerators, or high-capacity
memory that will be in high demand, On does produce controllers, power
converters, and e-fuse protection devices that can also be used in data center
on the recent conference call, CEO Hassane El-Khoury noted:
“... part of
that focus on what we call driver and controllers is the server or the cloud
infrastructure, which applies definitely to AI. [T]hat's the play we have
there. ... We're going to -- we decided, we're doubling down, we're starting to
run, and we're going to start delivering on that. That's going to be the
winning formula for this new business also. So stay tuned for more updates as
we get into Q4 or Q1 of '24.”
According to the issued ratings of 27 analysts in the last
year, the consensus rating for ON Semiconductor stock is Moderate Buy based on
the current 9 hold ratings and 18 buy ratings for ON. The average twelve-month
price prediction for ON Semiconductor is $109.31 with a high price target of
$135.00 and a low price target of $65.00.
The company has made an impressive
turnaround over the past few years under the activist investor-installed
El-Khoury, and that transition continues.
Since the company's transformation
is still in progress and the auto and industrial power chip segments are in
relatively early stages of growth, On's stock looks attractive at around 18.5
this year's earnings estimates.
ON Semiconductor has a
fifty day simple moving average of $96.40 and a two-hundred day simple moving
average of $85.75. The company has a current ratio of 2.39, a quick ratio of
1.60 and a debt-to-equity ratio of 0.37. The company has a market cap of $39.54
billion, a price-to-earnings ratio of 21.09, and a price-to-earnings-growth
ratio of 2.44 and a beta of 1.75. ON Semiconductor Corporation has a 12-month
low of $54.93 and a 12-month high of $111.35.