What Happened?

Shares of analog chips maker onsemi (NASDAQ:ON) fell 8.1% in the morning session after the company reported weak fourth-quarter results: revenue and EPS missed analysts' estimates. Its revenue and EPS guidance for next quarter also fell short of Wall Street's estimates. Management's comments suggest the business is still navigating "a market downturn." The weakness is most pronounced in its power and advanced solutions groups, where sales fell sequentially and compared to the previous year. Overall, this was a challenging quarter.

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What The Market Is Telling Us

onsemi’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was about a month ago when the stock dropped 7.8% on the news that a Truist analyst downgraded the stock's rating from Buy to Hold and lowered the price target from $85 to $60, citing weaker demand trends. Following a meeting with ON, the analysts added, "Management indicated that the business it intended to exit over the last couple of years will come to fruition this year, further pressuring revenue and, in turn, margins."

onsemi is down 22.8% since the beginning of the year, and at $47.66 per share, it is trading 42.6% below its 52-week high of $82.96 from March 2024. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $2,320.

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