Though its outlook generated conflicting responses from Wall Street, ON Semiconductor's (ON, Financial) shares climbed over 2% Monday following Q3 results that topped analyst expectations. With a mid-point of $1.76 billion, somewhat behind the consensus forecast of $1.78 billion, the business projected Q4 income between $1.51 billion and $1.81 billion. It also projected, from the estimated $1.00, adjusted profits per share between $0.92 and $1.04.
Commenting on the results call, President and CEO Hassane El-Khoury said, "Over the last several quarters, we talked about an L-shaped recovery and as expected, the demand environment remains muted with ongoing inventory digestion and slow end demand." El-Khoury pointed out that the automobile industry is still weak, particularly in view of declining demand for electric cars (EV). Except for some industries like utility-scale solar and aircraft, he said, industrial segments, which first struggled, have mostly recovered.
While North America and Europe continued to see demand downturn in automotive and industrial applications, regionally ON Semiconductor noted recoveries in China and Japan. Truist Securities noted the company's inventory levels surpassing targets and pointed out the guidance is "a hair below consensus". William Blair, on the other hand, kept a more optimistic view pointing out the company's 45% gross margin floor compliance.
