ON Semiconductor Corporation (ON), also known as onsemi has released its financial results for the second quarter of 2024 today. In this article, we will delve into the key insights from onsemi’s Q2 reports, explore the management discussion and analysis (MD&A).
Key Insights from onsemi’s Q2 Reports:
- Revenue: ON Semiconductor reported revenue of $1,735.2 million for Q2 2024, down from $1,862.7 million in Q1 2024 and $2,094.4 million in Q2 2023.
- Gross Margin: The company’s GAAP gross margin was 45.2%, with a non-GAAP gross margin of 45.3%.
- Operating Margin: GAAP operating margin stood at 22.4%, while the non-GAAP operating margin was 27.5%.
- Earnings Per Share (EPS): GAAP diluted EPS were $0.78, and non-GAAP diluted EPS were $0.96.
- Free Cash Flow: Year-over-year increase in free cash flow was approximately $250 million.
Management Discussion and Analysis:
Hassane El-Khoury, President and CEO of onsemi, emphasized the company’s dedication to growth through market share gains, strategic investments, and product portfolio expansion. A notable achievement this quarter is the supply agreement with Volkswagen Group, which underscores onsemi’s leadership in silicon carbide technology for the automotive sector. This agreement is expected to enhance the company’s production capacity and market presence in Europe, North America, and China.
Despite a challenging revenue environment, the company’s focus on strategic markets and leading global OEMs has positioned it well for future growth. The decline in revenue across all business segments – Power Solutions Group (PSG), Advanced Solutions Group (AMG), and Intelligent Sensing Group (ISG) – reflects broader market conditions, yet the company’s strategic initiatives are set to counterbalance these trends.
Stock Target Advisor’s Analysis on Onsemi:
Stock Target Advisor provides a slightly bullish outlook on ON Semiconductor, based on 9 positive signals and 4 negative signals. The average analyst target price for ON Semiconductor is USD 84.06 over the next 12 months, with an average rating of Strong Buy. At the last closing, the stock price was USD 70.17, showing a -2.36% change over the past week, +1.62% over the past month, and -33.23% over the last year.
Conclusion:
ON Semiconductor’s second-quarter performance reflects both the challenges and opportunities the company faces. Investors should consider both the positive aspects and the inherent risks associated with the stock.
