Key Takeaways
- Bank of America Securities elevated ON Semiconductor to Buy from Neutral, increasing the price objective from $70 to $85.
- Catalysts behind the upgrade include robust AI power opportunities, the Treo platform, and a three-year $6 billion share repurchase plan.
- BofA forecasts pro forma earnings and free cash flow reaching $6–$7 per share by 2028, approximately double today’s metrics.
- Shares have surged 96% in the trailing twelve months, currently trading at $68.65, approaching the 52-week peak of $73.76.
- Iridian Asset Management increased its ON holdings by 45.8% during Q4, while company executives sold roughly $6.09 million worth of shares last quarter.
ON Semiconductor ($ON) kicked off the week with renewed optimism from Wall Street following Bank of America Securities’ decision to elevate the stock to Buy from Neutral while boosting the price objective to $85 from $70.
ON Semiconductor Corporation, ON
Vivek Arya, analyst at BofA, highlighted the chipmaker’s expanding artificial intelligence power opportunity, the strength of its Treo product portfolio, and an attractive free cash flow yield near 6% as primary drivers for the optimistic stance. The company’s pledge to distribute nearly all free cash flow to shareholders through a $6 billion buyback initiative spanning three years further reinforced the bullish thesis.
Shares began Monday’s session at $68.65, hovering near the 52-week peak of $73.76. The stock has posted an impressive 96% gain over the past twelve months — a dramatic reversal from a three-year period where it declined 36% as the SOX semiconductor index rallied 132%.
This transformation didn’t happen by accident. Leadership addressed earlier underperformance by streamlining the product mix, reducing operating expenses, and prioritizing cash flow generation.
Financial Projections and Valuation Metrics
BofA increased its fiscal 2026 and 2027 earnings per share forecasts by 2% and 7% respectively. The revised $85 price objective applies a 21x multiple to projected 2027 earnings, up from the prior 18x multiple, acknowledging improved growth dynamics. The investment bank anticipates EPS expansion of 26% in 2026 and 40% in 2027.
Extending the timeline, BofA estimates pro forma earnings and free cash flow could hit $6–$7 per share by 2028, representing roughly double current performance levels. The firm identified September’s analyst day presentation as a potential stock-moving event.
In the latest quarterly results, ON delivered earnings of $0.64 per share, exceeding Wall Street expectations by $0.02. Revenue totaled $1.53 billion, marginally below the $1.54 billion analyst consensus. That revenue figure represented an 11.2% year-over-year decline. Management issued Q1 2026 EPS guidance between $0.56 and $0.66.
The stock trades at a trailing price-to-earnings multiple near 202, which remains stretched. The Street consensus price target stands at $64.19 with an overall Hold rating, comprising 12 Buy recommendations, 17 Hold ratings, and 1 Sell call.
Large Investor Accumulation and Executive Sales
Among institutional players, Iridian Asset Management expanded its ON position by 45.8% during the fourth quarter, acquiring 28,778 additional shares to reach a total of 91,632 shares worth approximately $4.96 million. Multiple other institutional funds similarly increased their allocations during the period. Institutional ownership now represents roughly 97.7% of outstanding shares.
Executive transactions told a contrasting story. Chief Financial Officer Trent Thad divested 60,000 shares at $71.22 in February, trimming his holdings by 15%. Insider Sudhir Gopalswamy sold 6,114 shares at $58.67 in March. Collectively, company insiders disposed of approximately 86,114 shares valued around $6.09 million during the most recent quarter.
Lead times throughout semiconductor categories have been extending. Analysis from Baird indicated MOSFET lead times averaging 25 weeks, suggesting momentum in the broader semiconductor recovery cycle — a dynamic that may benefit ON’s operations in upcoming quarters.
Simon Keeton, Group President of the Power Solutions Group, will step down effective June 30, 2026, with succession planning already in progress.
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