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shares of ON Semiconductor Shares fell 20% on Monday after the company’s third-quarter report beat expectations but offered a weak outlook for the rest of the year.
ON Semiconductor said it expects fourth-quarter earnings to be between $1.13 and $1.27 per share, excluding certain items, missing analysts’ expectations of $1.36. Similarly, the company said revenue would be between $1.95 billion and $2.05 billion, while Wall Street expected $2.18 billion.
Analysts at Deutsche Bank said ON Semiconductor’s guidance suggests the company has “finally succumbed to macro pressures” such as slowing auto demand.
“We are not surprised by today’s stock price movement following this disappointing outlook, as investors are likely wary of ON reverting to its old cyclical pattern,” they wrote. I am writing this in my Monday memo.
Still, analysts said they believe the company’s structural improvements will result in better results than in past cycles. They maintained a “buy” rating on the stock.
Analysts at Craig Hulme said they believe weaker demand for electric vehicles will hurt ON Semiconductor in the short term. He said this year would be a “more challenging year” for the company and said investors should “remain cautious”.
“We note that near-term auto uncertainties, including the recently concluded UAW strike, rising interest rates, and declining EV demand, are likely to have a negative impact in the coming quarters and much of 2024,” they wrote. I wrote it on Monday.
Analysts at Wolfe Research say ON Semiconductor has managed to avoid a downturn so far thanks to non-cancelable orders, long lead times and strength in the automotive sector, but challenges that remain in the market make it “unsustainable.” He added that it means that.
–CNBC’s Michael Bloom contributed to this report
