To The Moon

$ON Semiconductor(ON)$ 

Onsemi (NASDAQ: ON) reported mixed FQ2 results, but the long-term outlook remains positive. While revenue declined 15.5% year-over-year (YOY) to $1.47 billion, it still beat expectations slightly and marked sequential growth, signaling that the worst of the downturn may be over.

Key business segments showed improvement:

• Power Solutions Group (PSG) grew 2% YOY, returning to growth.

• Analog and Mixed-Signal Group (AMG) declined only 2% YOY, showing improvement.

• Intelligent Sensing Group (ISG) contracted 8% YOY, but that’s about half the rate of previous quarters.

Margins declined due to business deleveraging, but Onsemi still generated solid free cash flow (FCF) of $106.1 million and adjusted EPS of $0.53, in line with expectations. The company is financially stable with $3.3 billion in long-term debt, which is just 0.5x equity and 1.35x cash.

Q3 guidance is optimistic, expecting further sequential growth, a continued slowdown in YOY contraction, and revenue and earnings slightly above consensus, suggesting cautious but improving expectations.

Onsemi’s capital returns are strong, with over 4% reduction in share count YOY via buybacks. Despite reduced cash flow compared to prior years, it’s improving in 2025 and supports ongoing share repurchases and balance sheet health.

Institutional investors (owning over 97% of shares) resumed net buying in Q2 and Q3, showing renewed confidence. Analysts continue to rate the stock as a Hold with bullish bias, and recent price target revisions have moved upward. The consensus view sees fair value now, with potential upside of 15% to 35% by year-end.

Overall, July’s price pullback likely marked a bottom, and with improving fundamentals, Onsemi is well-positioned for long-term growth—especially through its strategic focus on SiC chip technology relevant to EV/AV, drones, and IoT markets.

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