ON Semiconductor: The Market's Overreaction Is Your Opportunity, Q4 Earnings Preview

2025-02-06 16:47:08 ET

Summary

• ON Semiconductor's recent market struggles mask its long-term potential, driven by its strategic moves in silicon carbide (SiC) and vertical integration.
• The company's acquisition of Qorvo’s SiC JFET business and its self-sufficiency in SiC production provide a competitive edge amid supply chain uncertainties.
• Despite short-term volatility and inconsistent earnings, ON's focus on SiC technology and partnerships like Volkswagen signal strong growth potential in EV and industrial markets.
• Valuation metrics suggest a contrarian buying opportunity, with projected EPS growth and cash flow performance indicating a potential 15-20% annual compounding through 2030.

Thesis

ON Semiconductor Corporation (NASDAQ: ON ) , in the simplest terms, designs and manufactures power management systems, signal processing tools, and sensor technologies. These components find their way into electric vehicles, where they help keep things efficient; energy infrastructure; factory automation; and high-performance computing — the backbone of everything from cloud storage to artificial intelligence....

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