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ON Semiconductor ON shares have lost 43% in the past 6 months, underperforming the Zacks Computer & Technology sector’s decline of 5.9% and the Semiconductor - Analog and Mixed industry’s fall of 24%.
ON has underperformed industry peers, including Magnachip Semiconductor MX, NXP Semiconductors NXPI and Analog Devices ADI.
Over the same time frame, shares of Magnachip Semiconductor, NXP Semiconductors and Analog Devices have lost 24.5%, 20.4% and 14.4%, respectively.
The decline in ON Semiconductor's share price is largely driven by a combination of factors, including weak fourth-quarter 2024 revenues across key segments, a softer-than-expected financial outlook, and heightened uncertainty in the automotive sector due to geopolitical uncertainty and slower-than-expected EV ramp-up.
ON Semiconductor Corporation price-consensus-chart | ON Semiconductor Corporation Quote
ON Semiconductor's recent performance underscores persistent challenges, with revenue declines across key segments signaling weaker demand and operational pressures. The company's struggles in power solutions, analog and sensing technologies indicate a broader slowdown.
In the fourth quarter of 2024, the Power Solutions Group posted a 16% year-over-year revenue decline, whereas the Analog and Mixed-Signal segment faced a steeper 18% drop. Although the Intelligent Sensing Group showed relative resilience, its modest 2% decline underscores the lingering market softness.
The above-mentioned declines collectively contributed to a double-digit year-over-year revenue contraction of 15%, reflecting cyclical headwinds and company-specific challenges that may extend into the near term.
ON faces volatility in the automotive sector, adding pressure to its financial performance. The company is navigating headwinds from geopolitical uncertainties, supply-chain disruptions and a slower-than-expected EV adoption rate. These factors have led to fluctuating demand, with automakers scaling back production forecasts amid shifting consumer sentiment and macroeconomic challenges.
Based on these above factors, ON Semiconductor anticipates a steep decline in automotive revenues for the first quarter of 2025, with a sequential drop of 25% or more, largely driven by weakening demand in China. The company’s near-term recovery remains uncertain as it navigates these challenges.
For the second quarter of 2025, the Zacks Consensus Estimate for earnings is pegged at 53 cents per share, down 7% over the past 30 days. The estimate indicates a year-over-year decline of 44.79%.
The consensus estimate for second-quarter 2025 revenues is pegged at $1.43 billion, suggesting a 17.57% decline from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for 2025 revenues is pegged at $6.07 billion, indicating a year-over-year decrease of 14.3%.
The consensus mark for 2025 earnings is pegged at $2.49 per share, down 4.2% over the past 30 days, implying a steep 37.44% year-over-year drop.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
ON Semiconductor faces considerable near-term headwinds, including declining revenues, weaker automotive demand and downward earnings revisions. Macroeconomic uncertainties, supply-chain disruptions and slowing EV adoption challenge its growth trajectory.
However, the company’s focus on expanding silicon carbide production and strengthening its position in high-growth markets could drive long-term recovery. The successful execution of these initiatives will be key to mitigating current pressures and restoring investor confidence.
ON Semiconductor currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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