Analysts Are Updating Their ON Semiconductor Corporation (NASDAQ:ON) Estimates After Its First-Quarter Results

Shareholders of ON Semiconductor Corporation (NASDAQ:ON) will be pleased this week, given that the stock price is up 14% to US$70.16 following its latest quarterly results. The result was positive overall - although revenues of US$1.9b were in line with what the analysts predicted, ON Semiconductor surprised by delivering a statutory profit of US$1.04 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ON Semiconductor after the latest results.

Check out our latest analysis for ON Semiconductor

After the latest results, the consensus from ON Semiconductor's 31 analysts is for revenues of US$7.21b in 2024, which would reflect an uneasy 12% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to plummet 24% to US$3.82 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.49b and earnings per share (EPS) of US$4.11 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$83.58 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ON Semiconductor, with the most bullish analyst valuing it at US$104 and the most bearish at US$55.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 15% annualised decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 17% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ON Semiconductor is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ON Semiconductor. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for ON Semiconductor going out to 2026, and you can see them free on our platform here..

You can also view our analysis of ON Semiconductor's balance sheet, and whether we think ON Semiconductor is carrying too much debt, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.