CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lower our 12-month target to $74 from $125, shifting to a lower revised P/E of 13x our 2025 EPS view, which we set at $5.70, below peers/historical. We cut our 2023 EPS view to $5.08 from $5.25 and 2024’s to $4.73 from $5.91. ON posted Q3 EPS of $1.39 vs. $1.45, beating the $1.34 consensus. Revenue fell fractionally (-0.5%), as automotive (+33%) and industrials (+0.4%) growth was offset by consumer declines (-42%). We are wary of inventory digestion across automotive/industrials, with ON citing softness from Tier 1 auto customers in Europe and increasing risks to demand amid high interest rates. While the secular prospects for silicon carbide remain positive (revenue up 4x in 2023), expectations for 2023 were cut to $800M in sales vs. $1B outlook, which could imply EV vendors are being more conservative with orders. Gross margin of 47.3% was near expectations, but we see margin compression ahead (low-40% trough), given a potential 2-3 quarter inventory digestion that drops utilization to the low-60% level.