ON Semiconductor Falls Despite Beat-And-Raise Third-Quarter Report

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ON Semiconductor ( ON ) shares dipped Monday despite the chipmaker reporting better-than-expected results for the third quarter and guiding higher for the current reporting period.

Phoenix-based ON Semi earned 25 cents a share on sales of $1.39 billion in its fiscal third quarter ended Sept. 29. That compares with 2 cents and $950.9 million in the year-earlier period. On an adjusted basis, ON Semi earned 44 cents a share. Analysts expected the company to earn an adjusted 40 cents a share on sales of $1.37 billion.

The 46% year-over-year increase in sales was primarily due to the inclusion of results from its acquisition of Fairchild Semiconductor in September 2016.

For the current quarter, ON Semi expects sales of $1.35 billion, based on the midpoint of its guidance. Analysts were modeling $1.33 billion. It guided to adjusted earnings per share of 37 cents in the December quarter, topping Wall Street's view by a penny.

"Our revenue momentum continues to accelerate as we benefit from our years of investments in technologies and capabilities that are enabling key innovations in automotive, industrial and communications end-markets," Chief Executive Keith Jackson said in a news release Sunday .

ON Semi shares fell 1.1% to close at 21.41 on the stock market today .

IBD'S TAKE:The IBD 50 list of top-performing growth stocks includes seven chip industry players, including Nvidia and Microchip Technology.

ON Semi makes chips for power management, logic, timing, connectivity, sensors and other applications. It serves automotive, communications, computing, consumer, industrial, medical, aerospace and defense markets.

Mizuho Securities analyst Vijay Rakesh reiterated his buy rating on ON Semi and raised his price target to 24 from 19.

"ON reported solid September-quarter results and guided to a strong December quarter," Rakesh said in a report. "We believe the December quarter and 2018 could see continued momentum with: 1) Automotive camera (advanced driver-assistance systems) growing at a 25% compound annual growth rate; 2) Industrial growth; 3) Handset and server content growth; and 4) Fairchild Semiconductor cost synergies in packaging and test insourcing."

Needham analyst Rajvindra Gill maintained his strong buy rating and price target of 25 on ON Semi.

ON Semi stock likely fell after the report because of a mix of higher buy-side expectations heading into the results, profit-taking after strong yearly performance, and increasing capital expenditures, Gill said.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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