What Happened?
Shares of analog chips maker onsemi (NASDAQ:ON) jumped 3.1% in the morning session after an analyst at Morgan Stanley raised the firm's price target to $54 from $39.
The move from Morgan Stanley signals growing confidence in the semiconductor company's prospects. This positive analyst action comes amid a broader optimistic sentiment in the semiconductor sector, which has been buoyed by strong earnings from industry bellwethers and surging demand related to artificial intelligence. For instance, Taiwan Semiconductor Manufacturing recently reported a 40% jump in revenue, driven by the AI boom. While onsemi's last earnings report in May showed a year-over-year revenue decline, the company still beat analysts' expectations for both earnings and revenue. Investors are now looking ahead to onsemi's second-quarter financial results, which are scheduled for release on August 4, for further signs of stabilization and growth.
After the initial pop the shares cooled down to $61.08, up 0.6% from previous close.
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What Is The Market Telling Us
onsemi’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 13.1% on the news that the company reported second quarter earnings that exceeded analysts' revenue, operating income, and EPS expectations. On the other hand, its revenue guidance for next quarter missed analysts' expectations and its inventory levels increased. Overall, this was a mixed quarter for ON Semiconductor, but the market seemed to show some relief and focus on the positives.
onsemi is down 1% since the beginning of the year, and at $61.08 per share, it is trading 22% below its 52-week high of $78.27 from July 2024. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $2,820.
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