Can On Semiconductor's Expanding Treo Platform Push the Stock Higher?

On Semiconductor ON is expanding its reach into high-efficiency power and sensing solutions with the introduction of the Treo Platform, an advanced analog and mixed-signal platform based on the Bipolar-CMOS-DMOS process technology at the 65nm node.

This versatile platform is designed to support a wide array of applications across automotive, industrial, healthcare, and data center markets, where energy efficiency and high performance are increasingly essential.

The Treo Platform enables customers to streamline product development with its scalable, modular architecture and wide voltage range (1-90V), allowing for rapid, customizable solutions.

The Treo Platform also integrates advanced digital processing and low-power features to enhance functionality, safety, and sustainability in applications like continuous glucose monitoring, park assist, and data center power management. This ultimately contributes to improved quality of life and lower environmental impact.

ON Benefits From Expanding Portfolio

ON’s latest move underscores its commitment to advancing power and sensing solutions that enhance energy efficiency and performance across various industries.

In the third quarter of 2024, ON’s power solutions benefited from growth in renewable energy markets, particularly in utility-scale solar and energy storage systems. The company’s hybrid SiC and IGBT (Insulated-Gate Bipolar Transistor) modules saw strong demand from top utility-scale manufacturers.

Expanding portfolio has been a key catalyst for ON’s growth. In June, On Semiconductor introduced its latest generation T10 PowerTrench family and EliteSiC 650V MOSFETs, offering unparalleled energy efficiency and high thermal performance for data centers, potentially reducing global energy consumption by 10 TWh annually.

Further advancing its offerings, in July, On Semiconductor announced the introduction of its EliteSiC M3e MOSFETs, a next-generation silicon carbide technology platform designed to enhance the performance and reliability of electrification initiatives while reducing carbon emissions and supporting the transition to renewable energy resources.

Expanding Clientele Aids ON’s Prospects

ON’s SiC solutions are gaining traction in automotive and industrial applications. In the third quarter of 2024, the company saw sequential growth in silicon carbide revenues, driven by utility-scale solar and gains in China’s battery electric vehicles.

ON’s dominant position in silicon carbide has been a major factor in its strong partner base, which includes BorgWarner BWA, Volkswagen VWAGY and Magna International MGA, thereby driving growth.

ON’s partnership with BorgWarner expands its collaboration for silicon carbide (SiC) technology, with a $1 billion lifetime value, integrating ON’s EliteSiC power devices into BorgWarner’s VIPER power modules to enhance EV efficiency and performance.

In July, the company announced a multi-year deal with Volkswagen Group to supply a complete power box solution featuring silicon carbide-based technologies for its next-generation traction inverter, enhancing EV efficiency and performance.

ON’s partnership with Magna involves a long-term supply agreement to integrate the company’s EliteSiC intelligent power solutions into Magna’s eDrive systems, enhancing EV efficiency, range, and production capacity.

ON’s Q4 Guidance Not so Rosy

ON is benefiting from an expanding portfolio and strong partner base. However, challenges remain, with overall demand subdued due to ongoing inventory digestion and slow end-market demand, particularly in North America and Europe, which is expected to hurt its top-line growth.

The stock has also lost 15.3% against the Zacks Computer & Technology sector’s growth of 29.5% year to date.

YTD Performance

For the fourth quarter of 2024, the company expects revenues between $1.71 billion and $1.81 billion.

The Zacks Consensus Estimate for revenues is pegged at $1.76 billion, indicating a year-over-year decline of 12.72%.

Non-GAAP earnings per share are envisioned to be between 92 cents and 1.04 cents.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 99 cents per share, which declined by a couple of pennies in the past 30 days. The figure indicates a year-over-year decline of 20.8%.

ON Semiconductor Corporation Price and Consensus

ON Semiconductor Corporation price-consensus-chart | ON Semiconductor Corporation Quote

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

ON’s Shares: Buy, Sell or Hold?

Despite a broadening portfolio across diverse end markets, ongoing macroeconomic uncertainty and frequent buyouts have been affecting ON’s financial position.

We point out that ON stock is not so cheap, as the Value Score of C suggests a stretched valuation at this moment.

ON shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

ON Shares Trade Below 50-Day & 200-Day SMA

ON carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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