Analyst Note
| William Kerwin |We raise our fair value estimate for Onsemi to $97 per share, from $74, after a confident analyst day that we believe has substance. Onsemi raised its long-term financial targets across the board, well above our expectations. Its targets are ambitious, but the management team has earned our confidence in achieving them, especially on the profitability front, given the firm's impressive transformation since 2020. We believe Onsemi has positioned itself to profit off of fast-growing secular trends and reduce cyclicality. Achieving its new targets will require defending myriad threats in silicon carbide and image sensing, as well as flawless execution on manufacturing efficiency. More than $17 billion cumulatively in long-term agreements give us confidence in management’s visibility. At our updated valuation, we see shares as attractive. The stock reaction to the event was uninspiring, which we believe is due to both skepticism on target achievement as well as already-high estimates and price targets.