Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Mar, 26 | ON | Buy | USD 63.1 | USD 66.3 | USD 69.4 | 4 days | Closed |
9.98%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
ON Semiconductor Corporation provides intelligent sensing and power solutions in the United States and internationally. The company operates through Power Solutions Group, Advanced Solutions Group, and Intelligent Sensing Group. Its intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers fast-charging systems, and propels sustainable energy for the solar strings, industrial power, and storage systems. In addition, the company offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, includes power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. Further, it designs and develops analog, mixed-signal, power management ICs and sensor interface devices for automotive, industrial, compute and mobile markets. Additionally, the company offers single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in the different end-markets. ON Semiconductor Corporation was incorporated in 1992 and is headquartered in Scottsdale, Arizona.
Improvement in Free Cash Flow Margin: FY25 free cash flow margin improved to approximately 24% compared to lower levels in FY24
Sequential Recovery in Q4 Performance Indicators: Q4FY25 revenue stood at USD 1,530.1 million compared to Q3FY25 revenue of USD 1,550.9 million
Earnings Collapse: FY25 net income declined to USD 121.0 million compared to USD 1,572.8 million in FY24
Sharp Gross Margin Compression: FY25 gross margin declined to 33.1% compared to 45.4% in FY24
A key investment risk for onsemi is that prolonged weakness in automotive and industrial demand, combined with margin sensitivity to utilization levels and elevated restructuring costs, could delay earnings recovery and pressure profitability despite strong cash flow generation
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 63.1 | 56.8 | 66.3 | 69.4 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Contraction Amid Cyclical Weakness: During FY25, onsemi reported a decline in total revenue to USD 5,995.4 million in FY25 compared to USD 7,082.3 million in FY24, reflecting a year-over-year contraction of approximately 15%. This decline was broad-based across all segments, with Power Solutions Group, Advanced Mobility Group, and Intelligent Sensing Group registering double-digit declines, indicating a cyclical slowdown across automotive, industrial, and sensing end markets.
Margin Compression Reflecting Operating Leverage Pressures: Profitability metrics weakened significantly during the year, with GAAP gross margin declining to 33.1% in FY25 from 45.4% in FY24, while non-GAAP gross margin moderated to 38.4% from 45.5%. Operating margins saw a sharper contraction, with GAAP operating margin declining to 1.4% from 25.0%, reflecting weaker revenue absorption and elevated cost pressures.
Earnings Decline Driven by Structural and Non-Recurring Costs: Net income attributable to shareholders declined sharply to USD 121.0 million in FY25 compared to USD 1,572.8 million in FY24, indicating significant earnings compression. The decline was driven by lower revenues, margin contraction, and elevated restructuring and impairment-related expenses, which increased materially during the year, impacting overall profitability.
Cost Structure and Expense Dynamics: Total operating expenses increased to USD 1,899.7 million in FY25 compared to USD 1,448.4 million in FY24, reflecting a substantial rise driven by restructuring, asset impairments, and other charges, which surged to USD 666.9 million in FY25 from USD 133.9 million in FY24. While core expenses such as R&D and SG&A declined modestly, the spike in non-recurring charges weighed heavily on operating income.
Cash Flow Resilience and Capital Allocation Discipline: Despite earnings pressure, the company demonstrated strong cash flow generation, with operating cash flow of approximately USD 1.8 billion and free cash flow of USD 1.4 billion in FY25, translating into a record free cash flow margin of 24%. The company returned the entire free cash flow to shareholders through share repurchases, highlighting disciplined capital allocation and balance sheet strength.
Strategic Investments and Technology Positioning: Operationally, onsemi continued to invest in next-generation technologies such as gallium nitride power devices and expanded partnerships with GlobalFoundries and Innoscience. The company also advanced its positioning in high-growth areas including automotive electrification, AI data center power solutions, and industrial automation, aligning its portfolio with long-term structural demand drivers.
Outlook Reflecting Gradual Stabilisation: Management commentary indicates early signs of stabilization in key markets, supported by improving demand trends and a completed investment cycle. The company expects revenue in the range of USD 1,435 million to USD 1,535 million for Q1FY26, with gradual margin recovery anticipated as cost optimization initiatives take effect.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to ON Semiconductor Corporation (NASDAQ: ON) at the closing market price of USD 63.10, as on Mar 25, 2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Semiconductors
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ON ON Semiconductor Corporation |
8.70 7.70% | 121.62 | 13.56 | 12.92 | 3.15 | 2.71 | 3.23 | 8.82 |
| NVDA NVIDIA Corporation |
6.04 2.95% | 210.69 | 62.11 | 36.76 | 36.43 | 51.65 | 36.19 | 61.96 |
| AVGO Broadcom Inc |
18.45 4.70% | 411.35 | 78.55 | 35.84 | 27.93 | 23.69 | 28.47 | 52.08 |
| TSM Taiwan Semiconductor Manufacturing |
29.97 6.94% | 462.12 | 19.45 | 15.92 | 0.24 | 4.85 | 0.22 | 0.30 |
| AMD Advanced Micro Devices Inc |
24.89 4.86% | 537.37 | 108.58 | 40.98 | 13.39 | 7.12 | 12.75 | 60.70 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on March 26, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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