BofA Global Research downgraded ON Semiconductor (NASDAQ:) to Neutral from Buy given a slower-than-expected restoration in gross sales and gross margins, largely from industrial and Western auto markets, News.az stories citing Investing.
The brokerage stated ON’s second-quarter outcomes mirrored a tepid rebound, with continued softness in U.S. and European automotive demand and missed expectations in industrial gross sales.
The firm’s rising dependence on China EVs was flagged as tough to trace and doubtlessly unsustainable.
BofA now expects 2026 gross sales to develop simply 5% 12 months over 12 months, properly beneath consensus expectations of 10%, harm by a $300 million drag from ongoing non-core exits.
Despite these exits, margins have but to point out significant enchancment, whereas silicon carbide (SiC) profitability stays diluted by low utilization.
Gross margin estimates have been reduce by 60–150 foundation factors for 2026–2027, as utilization stays constrained and distribution stock stays elevated.
BofA lowered its value goal to $56 from $70, based mostly on a diminished 20x a number of on 2026 earnings, down from 25x beforehand.
The agency stated ON stays range-bound within the close to time period, with information heart progress unlikely to change into a transparent catalyst till the second half of 2026.
The observe highlighted positives together with robust free money move and buybacks, a doubling of knowledge heart income, and stable market share in China EVs, however stated these weren’t sufficient to offset the shortage of near-term momentum.
