📊 ON Semiconductor beats estimates, but outlook elicits mixed reactions!
Shares of ON Semiconductor $ON are up as much as 4 % after the company posted third-quarter results that beat analysts' expectations. Despite these encouraging numbers, the outlook for the fourth quarter drew mixed reactions.
ON Semi expects revenue in the range of $1.71 billion to $1.81 billion, while the consensus estimate was slightly higher at $1.78 billion. Adjusted earnings per share are expected to be between $0.92 and $1.04, while estimates were closer to $1 per share. 📉
Macroeconomic factors and sectors under pressure 🛠️
According to CEO Hassan El-Khoury the company continues to struggle with weak end demand and inventory destocking, which is most evident in the automotive sector, which continues to show no improvement, and in electric vehicles, where a slowdown in growth is evident. Regionally, the recovery is mainly in China a Japanwhile North America a Europe remain low in both the automotive and industrial sectors.
Despite this slowdown, the El-Khoury is convinced that the company's long-term strategy is sound. He stresses that the focus is on power technologies, where demand is growing steadily, and on efficiency, which is key in all markets, especially in the automotive and industrial sectors.
Mixed analyst reactions 💹
Analyst reactions to the outlook were mixed. Truist Securities commented on the outlook as slightly below consensus and noted that ON Semi inventoryis still above the 115-120 day target , which could pressure future margins. Conversely , William Blair remains optimistic and assesses a stable gross margin floor at 45 % as a positive factor that shows the company's resilience in the current challenging environment.
Investing in the future 🚀
ON Semiconductor continues to invest in key segments, particularly in power solutions and artificial intelligence in data centers. With increasing demands for efficiency in the automotive sector, industry and AI infrastructure, the company has a chance to gain market share even in times of economic uncertainty.
Despite the difficult macroeconomic situation ON Semi is sending a clear signal - it is ready to seize opportunities and stay on course for long-term growth.
What is your opinion of ON Semi? 📈
The development is interesting, but it's probably not for me and it doesn't fit my portfolio.
The price action hasn't been entirely clear, but the stock has been in a sideways trend for a long time and these results don't seem to change that. So we'll have to wait for movement in this company.
The results were quite good. I've had $ON stock on my watchlist for a while now, but I'm still waiting for a better price to buy.