Truist Lowers On Semi Price Target to $43, Keeps Hold Rating

Truist lowered its price target on On Semi to $43 from $52 and maintained a Hold rating. The company beat Q1 revenue and earnings expectations, but the beat came from the "other" end market, which is not strategic. The analyst notes that bookings strength in Q1 abated in early Q2 after tariffs were announced.

Onsemi (Nasdaq: ON), a leading provider of intelligent power and sensing technologies, reported its first quarter 2025 results, highlighting a strong performance despite challenging market conditions. The company reported revenue of $1,445.7 million, a 16% decrease year-over-year, driven by a decline in the "other" end market. The "other" market, which is not considered strategic, accounted for a significant portion of the revenue decrease [1].

Onsemi's gross margin and non-GAAP gross margin stood at 20.3% and 40.0%, respectively, while the GAAP operating margin and non-GAAP operating margin were (39.7)% and 18.3%, respectively. The company reported a GAAP diluted loss per share of $(1.15) and a non-GAAP diluted earnings per share of $0.55, both of which were better than analyst expectations [1].

The company generated $602 million in cash from operations and $455 million in free cash flow, a 72% increase year-over-year, representing 31% of revenue. Onsemi's CEO, Hassane El-Khoury, attributed the improved free cash flow to a disciplined approach to cost management, right-sizing manufacturing, and portfolio rationalization [1].

However, Truist Financial lowered its price target on Onsemi to $43 from $52, maintaining a Hold rating. The analyst noted that while Onsemi beat Q1 revenue and earnings expectations, the beat came from the "other" end market, which is not strategic. Additionally, the analyst mentioned that bookings strength in Q1 abated in early Q2 after tariffs were announced [1].

Onsemi's projected second quarter 2025 GAAP and non-GAAP outlook includes revenue of $1,400 to $1,500 million, a gross margin of 36.4% to 38.4%, and a non-GAAP diluted earnings per share of $0.45 to $0.55 [1].

References:
[1] https://investor.onsemi.com/news-releases/news-release-details/onsemi-reports-first-quarter-2025-results