2024-04-26 11:20:56 ET
Summary
- Onsemi's exposure to the automotive and industrial markets are my main concern for its top-line growth in 2024.
- I think Onsemi is going to see another set of quarter-over-quarter declines in its 1Q24.
- The bulk of the negatives surrounding Onsemi have already been factored into the stock, especially after the recent downgrade by BNP Paribas.
- I share my thoughts on Onsemi here and why I think it doesn't have much upside in 2024.
Investment thesis
ON Semiconductor ( ON ) is set to announce its first quarter of FY2024 next Monday, April 29th. I think investors should approach the stock with caution ahead of earnings and, if they can afford it, trim their position and reallocate funds in stocks better positioned to show upside over the next two quarters. Onsemi is considered a power/analog name, competes closely with Monolithic Power Systems ( MPWR ), and offers a differentiated product portfolio focused on automotive and industrial end markets. It is Onsemi’s exposure to the automotive and industrial markets that concerns me, and here’s why. First, both these markets are undergoing an inventory correction cycle. And second, there is no visible uptick in EV end demand to support Onsemi’s top-line growth, which is highly exposed to the auto-market. I’m initiating Onsemi with a hold only because most of the negatives have already been factored into the stock, not because I see recovery for the next two quarters....
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ON Semiconductor: Limited Upside In 2024 - Initiating With Hold