Key Takeaways
- BofA Securities elevated ON Semiconductor from Neutral to Buy, increasing the price target from $70 to $85.
- Analyst cited AI power opportunities, Treo platform momentum, and a three-year $6 billion capital return program as upgrade drivers.
- BofA forecasts pro forma EPS and free cash flow reaching $6–$7 per share by 2028, approximately double today’s metrics.
- Shares delivered a 96% gain over the past year, currently trading at $68.65, close to the 52-week peak of $73.76.
- Iridian Asset Management increased its ON holdings by 45.8% during Q4, while company insiders divested roughly $6.09 million in shares last quarter.
ON Semiconductor ($ON) kicked off the week with renewed enthusiasm from Wall Street as BofA Securities elevated the stock to Buy from Neutral while increasing the price target to $85 from $70.
ON Semiconductor Corporation, ON
Analyst Vivek Arya from BofA highlighted the company’s expanding AI power opportunities, momentum in its Treo product portfolio, and an attractive free cash flow yield near 6% as primary factors behind the rating upgrade. The commitment from management to distribute nearly all free cash flow to shareholders through a $6 billion repurchase initiative spanning three years strengthened the bullish thesis.
Shares began Monday’s session at $68.65, hovering near the 52-week peak of $73.76. The stock posted a 96% gain over the trailing twelve months — a dramatic reversal from a three-year period where it declined 36% while the SOX semiconductor index surged 132%.
This transformation came through focused execution. Leadership addressed earlier challenges by streamlining the product lineup, reducing operational expenses, and prioritizing cash flow generation.
Financial Projections and Market Valuation
BofA lifted its earnings per share forecasts for 2026 and 2027 by 2% and 7% respectively. The revised $85 price target applies a 21 times multiple to 2027 earnings, up from the previous 18 times, acknowledging an enhanced growth trajectory. The firm anticipates EPS expansion of 26% in 2026 followed by 40% in 2027.
Extending the outlook to 2028, BofA projects pro forma EPS and free cash flow between $6–$7 per share, representing approximately double the current levels. The analyst highlighted the upcoming September analyst day as a likely positive event.
During the latest quarterly period, ON delivered earnings of $0.64 per share, surpassing estimates by $0.02. Revenue reached $1.53 billion, slightly under the $1.54 billion consensus forecast. This represented an 11.2% year-over-year decline. Management provided Q1 2026 EPS guidance between $0.56 and $0.66.
The stock trades at a trailing price-to-earnings ratio near 202, which remains high. The analyst community maintains an average price target of $64.19 with an overall consensus of Hold, comprising 12 Buy recommendations, 17 Hold ratings, and 1 Sell rating.
Fund Activity and Management Transactions
Among institutional investors, Iridian Asset Management expanded its ON position by 45.8% during Q4, acquiring 28,778 shares to reach a total of 91,632, valued at roughly $4.96 million. Multiple additional funds increased their allocations during the same period. Institutional ownership currently stands at approximately 97.7% of outstanding shares.
Insider transactions showed a contrasting pattern. CFO Trent Thad divested 60,000 shares at $71.22 in February, lowering his holdings by 15%. Insider Sudhir Gopalswamy sold 6,114 shares at $58.67 in March. Combined insider sales totaled approximately 86,114 shares valued at roughly $6.09 million during the last quarter.
Lead times across semiconductor categories have been extending. Analysis from Baird indicated MOSFET lead times averaging 25 weeks, pointing to momentum in the broader semiconductor expansion cycle — a development that may benefit ON’s operations in upcoming quarters.
Simon Keeton, Group President of the Power Solutions Group, plans to step down effective June 30, 2026, with leadership succession arrangements underway.
