ON Semiconductor (ON) PT Lowered to $69 at Benchmark

Benchmark analyst Ruben Roy lowered the price target on ON Semiconductor (NASDAQ: ON) to $69.00 (from $72.00) while maintaining a Buy rating.

The analyst comments "Despite the softening macro backdrop On Semi’s 3Q results topped estimates on continued strength in Automotive, but ongoing softness in non-core segments and pockets of weakness developing in the Industrial market weighed on the 4Q outlook. Longer term demand remains healthy as evidenced by a $5.3B increase LTSA value in the period and 19% growth in design wins QoQ. However, another quarter of slowing wafer starts, which is 20% below the beginning of the year peak output, points to a more pronounced 1H23 slowdown. While the underlying growth drivers remain solidly intact and the model structurally sound with incremental leverage available, we expect margin to remain under pressure over the next several quarters as SiC expansion, EFK startup costs, and slowing sales growth erode the benefits of pricing actions, portfolio rationalization, fab disposition. We remain confident in the longer-term growth opportunities with strong content expansion as EV adoption accelerates but are cautious on near term macro volatility. On our lowered estimates, we reduce our PT to $69, but maintain our Buy rating."

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