Should You Fold ON Semiconductor Stock After 43% Dip in 6 Months?

Core Insights - ON Semiconductor's shares have declined by 43% over the past six months, significantly underperforming the broader Computer & Technology sector and the Semiconductor - Analog and Mixed industry [1] - The decline is attributed to weak fourth-quarter 2024 revenues, a softer financial outlook, and uncertainty in the automotive sector due to geopolitical issues and slow EV adoption [2][6] Revenue Performance - The Power Solutions Group experienced a 16% year-over-year revenue decline, while the Analog and Mixed-Signal segment saw an 18% drop [4] - The Intelligent Sensing Group's revenue declined by 2%, indicating ongoing market softness [4] - Overall, ON Semiconductor reported a 15% year-over-year revenue contraction, reflecting both cyclical and company-specific challenges [5] Automotive Sector Challenges - The automotive sector's volatility is impacting ON Semiconductor's financial performance, with factors such as geopolitical uncertainties and supply-chain disruptions contributing to fluctuating demand [6] - A significant decline in automotive revenues is anticipated for the first quarter of 2025, with a sequential drop of 25% or more expected, primarily due to weakening demand in China [7] Earnings and Revenue Estimates - For the second quarter of 2025, the Zacks Consensus Estimate for earnings is 53 cents per share, reflecting a 44.79% year-over-year decline [8] - The revenue estimate for the same quarter is $1.43 billion, indicating a 17.57% decrease from the previous year [8] - The 2025 revenue estimate stands at $6.07 billion, representing a 14.3% year-over-year decrease, while earnings are projected at $2.49 per share, down 37.44% year-over-year [9] Long-term Outlook - Despite current challenges, ON Semiconductor is focusing on expanding silicon carbide production and strengthening its position in high-growth markets, which could support long-term recovery [12]