On Tuesday, TD Cowen maintained a positive outlook on ON Semiconductor shares (NASDAQ:ON), albeit with a reduced price target. The firm, while keeping a Buy rating on the stock, adjusted its price target downward to $85 from the previous $90. The reduction comes amid broader negative sentiment surrounding electric vehicles (EVs) and Tesla (NASDAQ:TSLA).
The semiconductor company's recent modest guide-down was deemed sufficient in light of the current market sentiment. Despite limited commentary on Silicon Carbide (SiC), ON Semiconductor is expected to grow at twice the market rate in 2024, with plans for diversification that could help mitigate the impact of any negative Tesla-related developments.
ON Semiconductor's gross margin (GM) has been noted as a significant achievement, with a 45% floor that indicates strong performance and potential for recovery in utilization rates. The firm's ability to manage utilization rates and inventory both on-books and in the channel was highlighted as a positive. Furthermore, ON Semiconductor's strategy to refill channel inventory is anticipated to provide a growth tailwind.
The analyst's estimates for ON Semiconductor have been slightly lowered, but the Buy rating remains unchanged, signaling continued confidence in the company's prospects despite the recent adjustment in the stock price target to $85.
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