Key Takeaways
- Bank of America Securities elevated ON Semiconductor from Neutral to Buy, setting a new price target of $85, up from $70.
- The analyst upgrade hinges on expanding AI power demand, momentum in Treo product offerings, and a significant $6 billion share repurchase plan spanning three years.
- BofA forecasts pro forma earnings per share and free cash flow could reach $6–$7 per share by 2028, approximately double today’s metrics.
- Shares have surged 96% in the past twelve months, currently trading at $68.65, approaching the 52-week peak of $73.76.
- Iridian Asset Management expanded its ON holdings by 45.8% during Q4, while company insiders liquidated roughly $6.09 million worth of shares in the recent quarter.
ON Semiconductor ($ON) kicked off the week with renewed optimism from Wall Street following Bank of America Securities’ decision to elevate the stock to Buy from Neutral and increase the price objective to $85 from $70.
ON Semiconductor Corporation, ON
BofA’s analyst Vivek Arya highlighted several catalysts behind the upgraded outlook: the company’s expanding artificial intelligence power infrastructure pipeline, strength in its Treo product portfolio, and an attractive free cash flow yield hovering around 6%. Adding to the bullish thesis, management’s pledge to distribute nearly all free cash flow via a $6 billion share repurchase initiative over three years reinforced confidence.
Shares began Monday trading at $68.65, hovering near the 52-week peak of $73.76. The past year has been transformative for ON, delivering 96% gains to shareholders — a dramatic reversal after a challenging three-year period that saw the stock decline 36% while the broader SOX semiconductor index advanced 132%.
This turnaround didn’t happen by accident. Company leadership addressed earlier struggles through strategic portfolio rationalization, aggressive cost reduction measures, and renewed emphasis on cash generation.
Financial Projections and Market Valuation
BofA revised its earnings forecasts upward, increasing 2026 EPS estimates by 2% and 2027 projections by 7%. The refreshed $85 price target applies a 21x multiple to 2027 earnings, elevated from the previous 18x valuation, acknowledging the company’s enhanced growth trajectory. The investment bank anticipates 26% EPS expansion in 2026 followed by 40% growth in 2027.
Extending the timeline further, BofA envisions pro forma earnings per share and free cash flow hitting $6–$7 per share by 2028, essentially doubling current performance levels. The firm identified September’s scheduled analyst day as a potentially significant positive catalyst.
During the latest quarterly earnings release, ON delivered $0.64 per share, exceeding Wall Street expectations by $0.02. Revenue totaled $1.53 billion, marginally below the $1.54 billion consensus forecast, representing an 11.2% year-over-year decline. Management provided Q1 2026 guidance projecting EPS between $0.56 and $0.66.
The stock currently trades at a trailing price-to-earnings multiple near 202, which remains notably high. The analyst community maintains an average price target of $64.19 with an overall Hold consensus, comprising 12 Buy ratings, 17 Hold recommendations, and 1 Sell rating.
Large Investor Activity and Executive Transactions
Among institutional investors, Iridian Asset Management significantly increased its ON position by 45.8% in Q4, acquiring 28,778 additional shares to reach a total holding of 91,632 shares valued near $4.96 million. Multiple other institutional funds similarly expanded their stakes during the quarter. Collectively, institutional ownership accounts for approximately 97.7% of outstanding shares.
Executive trading activity told a contrasting story. Chief Financial Officer Trent Thad divested 60,000 shares at $71.22 in February, trimming his position by 15%. Separately, insider Sudhir Gopalswamy sold 6,114 shares at $58.67 in March. Combined, company insiders disposed of approximately 86,114 shares totaling around $6.09 million during the most recent quarter.
Industry data from Baird research indicates MOSFET lead times currently averaging 25 weeks across semiconductor categories, suggesting acceleration in the broader semiconductor industry upturn — a dynamic that could provide tailwinds for ON’s operations in upcoming quarters.
In leadership news, Simon Keeton, Group President of the Power Solutions Group, will depart the company effective June 30, 2026, with succession planning underway.
