ON Semiconductor share buyback expresses confidence in cash generation ability



© Reuters ON Semiconductor (ON) share buybacks expresses confidence in cash generation ability – Credit Suisse

By Sam Boughedda

ON Semiconductor Corporation (NASDAQ:) shares opened Monday’s session lower but are now up on the day following its latest earnings release, which saw it top earnings and revenue expectations.

Credit Suisse analysts, who have a Neutral rating and $83 per share price target on the stock, said the company’s earnings were a slight upside, but it guided below consensus expectations for March.

earnings of $1.32 per share on revenue of $2.1 billion. Analysts expected earnings of $1.26 per share on revenue of $2.08B.

The company said it sees Q1 2023 EPS of $1.02 to $1.14, versus the consensus of $1.15, while revenue for the period is seen between $1.87B and $1.97B, versus the consensus of $2B.

“Revenue was guided down 8.5% q/q to $1.92bn at the midpoint, vs. consensus of $2bn. GM guidance appears in-line with expectations. The company also announced a $3bn buyback, doubled the prior buyback that expired in December,” said the analysts in a research note.

“The buyback is notable since it would appear to express confidence in ON’s cash generation ability, while they are still in the midst of scaling up SiC capacity,” they added. “Recall that at both CES in January and at our conference in November, the company noted that they had seen no signs of weakness in their core industrial/auto markets and remained highly confident in their $1bn SiC revenue target for CY23. Also recall that ON continues to walk away from non-core segments, which could be the reason for the guide lower.”


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