Key Takeaways
- Bank of America Securities elevated ON Semiconductor from Neutral to Buy, increasing the price target from $70 to $85.
- The bullish call stems from expanding AI power opportunities, Treo platform traction, and a three-year $6 billion capital return program.
- BofA projects pro forma earnings and free cash flow could reach $6–$7 per share by 2028, approximately double today’s levels.
- Shares have climbed 96% over the trailing twelve months, currently trading at $68.65, approaching the 52-week peak of $73.76.
- Iridian Asset Management increased its ON holdings by 45.8% during Q4, while company insiders divested roughly $6.09 million worth of shares last quarter.
ON Semiconductor ($ON) kicked off the week with renewed optimism from Wall Street as Bank of America Securities elevated its rating to Buy from Neutral and raised the price objective to $85 from $70.
ON Semiconductor Corporation, ON
BofA’s Vivek Arya highlighted the semiconductor maker’s expanding artificial intelligence power pipeline, momentum in its Treo product portfolio, and an attractive free cash flow yield hovering around 6% as primary catalysts behind the upgrade. The company’s pledge to distribute virtually all free cash flow to shareholders via a $6 billion stock repurchase initiative spanning three years strengthened the investment thesis.
Shares began Monday’s session at $68.65, hovering near the 52-week zenith of $73.76. The stock has surged 96% over the past twelve months — a dramatic reversal from a three-year period that saw it decline 36% while the SOX semiconductor index soared 132%.
This transformation didn’t happen by accident. Leadership addressed earlier headwinds by streamlining the product catalog, reducing operational expenses, and prioritizing cash flow generation.
Financial Projections and Market Valuation
BofA revised its earnings forecasts higher, lifting 2026 and 2027 EPS estimates by 2% and 7% respectively. The upgraded $85 price objective applies a 21x multiple to projected 2027 earnings, up from the previous 18x valuation, acknowledging enhanced growth prospects. The investment bank anticipates earnings growth of 26% in 2026 followed by 40% expansion in 2027.
Extending the timeline, BofA envisions pro forma earnings per share and free cash flow reaching $6–$7 by 2028, representing roughly a 100% increase from current performance. The firm identified September’s analyst day as a potential upside catalyst.
In its latest quarterly filing, ON delivered $0.64 in earnings per share, exceeding Wall Street’s consensus by $0.02. Revenue totaled $1.53 billion, marginally below the anticipated $1.54 billion. That represented an 11.2% year-over-year decline. For the first quarter of fiscal 2026, management provided EPS guidance between $0.56 and $0.66.
The stock currently trades at a trailing P/E ratio near 202, which remains substantially elevated. The analyst community maintains an average price target of $64.19 with an overall Hold consensus, comprising 12 Buy recommendations, 17 Hold ratings, and 1 Sell opinion.
Institutional Accumulation Versus Insider Divestment
Among institutional players, Iridian Asset Management expanded its ON position by 45.8% during the fourth quarter, acquiring 28,778 additional shares to reach a total holding of 91,632 shares, valued at approximately $4.96 million. Multiple other institutional investors similarly enlarged their stakes during the period. Institutional ownership now comprises roughly 97.7% of outstanding shares.
Insider transactions told a contrasting story. Chief Financial Officer Trent Thad divested 60,000 shares at $71.22 per share in February, trimming his ownership by 15%. Separately, insider Sudhir Gopalswamy sold 6,114 shares at $58.67 during March. Collectively, company insiders unloaded approximately 86,114 shares valued at roughly $6.09 million throughout the most recent quarter.
Lead times throughout semiconductor product categories have been extending. Analysis from Baird indicated MOSFET lead times now averaging 25 weeks, suggesting acceleration in the broader semiconductor industry upcycle — a dynamic that could benefit ON’s operations in forthcoming quarters.
Simon Keeton, Group President of the Power Solutions Group, plans to step down effective June 30, 2026, with leadership succession arrangements underway.
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