TLDR
- BofA Securities upgraded ON Semiconductor from Neutral to Buy, raising its price target from $70 to $85.
- The upgrade was driven by AI power pipeline, Treo products, and a $6 billion buyback commitment over three years.
- BofA sees pro forma EPS and free cash flow potential of $6–$7 per share by 2028, roughly double current levels.
- The stock has returned 96% over the past year, trading at $68.65, near its 52-week high of $73.76.
- Institutional investor Iridian Asset Management boosted its ON stake by 45.8% in Q4, while insiders sold approximately $6.09 million in stock last quarter.
ON Semiconductor ($ON) started Monday with a fresh vote of confidence from Wall Street after BofA Securities bumped its rating to Buy from Neutral and lifted its price target to $85 from $70.
ON Semiconductor Corporation, ON
BofA analyst Vivek Arya pointed to the company’s growing AI power pipeline, its Treo product line, and a healthy free cash flow yield of around 6% as key reasons for the upgrade. Management’s commitment to return nearly all of its free cash flow to investors through a $6 billion buyback program over the next three years added further weight to the call.
The stock opened Monday at $68.65, close to its 52-week high of $73.76. Over the past year, ON has delivered a 96% return — a sharp turnaround from a three-year stretch where it fell 36% while the SOX index climbed 132%.
The shift has been deliberate. Management responded to earlier weakness by trimming the product portfolio, cutting costs, and focusing on cash generation.
Earnings and Valuation in Focus
BofA raised its 2026 and 2027 earnings per share estimates by 2% and 7% respectively. The new $85 target is based on 21 times 2027 earnings, up from 18 times previously, reflecting an improving growth profile. The firm projects EPS growth of 26% in 2026 and 40% in 2027.
Looking further out, BofA sees pro forma EPS and free cash flow of $6–$7 per share by 2028, roughly twice where the company sits today. The firm flagged September’s analyst day as a potential positive catalyst.
In its most recent quarterly report, ON posted earnings of $0.64 per share, beating estimates by $0.02. Revenue came in at $1.53 billion, slightly below the $1.54 billion consensus. That figure was down 11.2% year over year. For Q1 2026, the company guided EPS in the range of $0.56 to $0.66.
The stock carries a trailing price-to-earnings ratio of around 202, which remains elevated. Analysts have an average price target of $64.19 and an overall consensus rating of Hold, with 12 Buy ratings, 17 Hold ratings, and 1 Sell.
Institutional Buying and Insider Selling
On the institutional side, Iridian Asset Management boosted its ON position by 45.8% in Q4, picking up 28,778 shares to bring its total to 91,632, valued at approximately $4.96 million. Several other funds also added to their positions during the quarter. Institutional investors now own about 97.7% of the company’s stock.
Insider activity painted a different picture. CFO Trent Thad sold 60,000 shares at $71.22 in February, reducing his stake by 15%. Insider Sudhir Gopalswamy sold 6,114 shares at $58.67 in March. In total, insiders offloaded around 86,114 shares worth approximately $6.09 million over the last quarter.
Lead times across semiconductor segments have also been rising. Research from Baird noted MOSFET lead times averaging 25 weeks, signaling an acceleration in the broader semiconductor upcycle — a trend that could support ON’s business in coming quarters.
Group President of the Power Solutions Group Simon Keeton is set to resign effective June 30, 2026, with a transition to new leadership planned.
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