ON Semiconductor: Powering Up For Industrial And EV Growth, Analyst Says

Mizuho analyst Vijay Rakesh reiterated a Buy rating on ON Semiconductor Corporation ON, raising the price target to $90 from $88.
The analyst believes ON is well positioned for industrial growth and is "an EV and Camera Automotive content story" with additional tailwinds from servers and computing with better top-line growth and improving margins.
The company has significant opportunities to expand its top line and drive EPS, as GMs are trending better, the analyst notes.
Based on the above, FY23 revenue is raised from $8 billion to $8.21 billion. EPS is raised from $4.47 to $4.90.
However, the analyst expects utilization to remain in the low 70% range for the remainder of 2023 as the company stays cautious in the face of macro headwinds.
ON maintains its $1 billion/year run-rate while it sees its cloud/5G business growing at an 11% 2021-2025 CAGR. On May 1, the company reported first-quarter FY23 revenue growth of 1% year-on-year to $1.96 billion. The company expects second-quarter adjusted revenue of $1.975 billion-$2.075 billion.
Price Action: ON shares are trading up 1.19% at $79.26 on last check Tuesday.

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