ON Semiconductor (ON) Stock Reemerges on Wall Street’s Radar With BofA’s Buy Call

TLDR

• BofA Securities lifted ON Semiconductor’s rating from Neutral to Buy, increasing its price target from $70 to $85.
• The upgrade was fueled by the company’s AI power pipeline, Treo product line, and a three-year, $6 billion share repurchase pledge.
• BofA anticipates pro forma earnings per share (EPS) and free cash flow could reach $6–$7 per share by 2028, about twice the current figures.
• Over the past year, the stock has generated a 96% return and is currently trading at $68.65, close to its 52-week peak of $73.76.
• Institutional investor Iridian Asset Management increased its ON holdings by 45.8% in Q4, whereas company insiders sold around $6.09 million worth of stock in the previous quarter.

(SeaPRwire) –   ON Semiconductor ($ON) kicked off Monday with a new vote of confidence from Wall Street, following BofA Securities’ upgrade of its rating from Neutral to Buy and a hike in its price target from $70 to $85.

ON Semiconductor Corporation, ON

BofA analyst Vivek Arya cited the company’s expanding AI power pipeline, Treo product line, and a solid free cash flow yield of roughly 6% as primary factors behind the upgrade. Management’s promise to return almost all of its free cash flow to investors via a $6 billion share repurchase program over the next three years further strengthened the recommendation.

The stock opened at $68.65 on Monday, near its 52-week high of $73.76. Over the last 12 months, ON has posted a 96% return — a stark reversal from a three-year period when it dropped 36% while the SOX index rose 132%.

This change was intentional. To address prior underperformance, management streamlined the product portfolio, reduced costs, and prioritized cash generation.

Earnings and Valuation in Focus

BofA increased its 2026 and 2027 EPS estimates by 2% and 7% respectively. The new $85 target is calculated at 21 times 2027 earnings, up from the prior 18 times, which mirrors an improving growth outlook. The firm forecasts EPS growth of 26% in 2026 and 40% in 2027.

Looking ahead, BofA expects pro forma EPS and free cash flow to hit $6–$7 per share by 2028, approximately double the current levels. The firm identified September’s analyst day as a possible positive trigger.

In its latest quarterly report, ON reported earnings of $0.64 per share, exceeding estimates by $0.02. Revenue stood at $1.53 billion, marginally below the $1.54 billion consensus. This revenue figure was 11.2% lower than the previous year. For Q1 2026, the company provided EPS guidance between $0.56 and $0.66.

The stock has a trailing price-to-earnings ratio of about 202, which is still high. Analysts have an average price target of $64.19 and a consensus rating of Hold, consisting of 12 Buy ratings, 17 Hold ratings, and 1 Sell.

Institutional Buying and Insider Selling

Among institutional investors, Iridian Asset Management increased its ON stake by 45.8% in Q4, purchasing 28,778 shares to bring its total to 91,632, worth around $4.96 million. Multiple other funds also expanded their positions during the quarter. Institutional investors currently hold roughly 97.7% of the company’s shares.

Insider activity told a contrasting story. CFO Trent Thad sold 60,000 shares at $71.22 in February, cutting his stake by 15%. Insider Sudhir Gopalswamy sold 6,114 shares at $58.67 in March. Overall, insiders sold roughly 86,114 shares valued at about $6.09 million in the previous quarter.

Lead times across semiconductor sectors have also been increasing. Baird’s research indicated that MOSFET lead times average 25 weeks, suggesting a pickup in the wider semiconductor upcycle — a trend that may benefit ON’s business in the upcoming quarters.

Simon Keeton, Group President of the Power Solutions Group, will step down effective June 30, 2026, with a transition to new leadership in the works.