Onsemi Earnings: We Trim Our 2024 Forecast and Valuation but Still See Shares as Attractive

We lower our fair value estimate for shares of narrow-moat Onsemi to $86, from $94, as we trim our short-term forecast to reflect a higher impact from the ongoing power chip downturn. We continue to like Onsemi’s ability to navigate the current period of weaker demand, especially on the profitability front. We also see softer demand as a short-term dynamic, resulting from overordering at customers in 2023, and we maintain our confidence in Onsemi’s long-term growth opportunity in electric vehicles and renewable energy. Nonetheless, we now model a greater decline in sales in 2024 after second-quarter guidance missed our expectations. We continue to model a rebound in 2025. We still see shares as undervalued and see cyclical weakness as a buying opportunity for long-term investors.