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Onsemi shares skyrocket as Q3 earnings, revenue top analysts’ predictions

Phoenix Business Journal

Onsemi shares took a big leap on Monday as the Valley maker of tiny semiconductor components not only beat Wall Street predictions for its fiscal third quarter but issued bullish guidance for Q4 that was also ahead of analysts’ expectations.

Phoenix-based Onsemi (Nasdaq: ON) ended up with non-GAAP earnings of 87 cents per share as compared to analysts’ estimates of 74 cents for the three months ended Oct. 1; while revenue clocked in at $1.74 billion — a quarterly record — ahead of the consensus estimate of $1.71 billion.

What’s more, CEO Hassane El-Khoury said that the company’s stake in leading-edge sectors such as electric vehicles, advanced manufacturing and alternative energy has it poised for solid growth ahead, predicting revenue could grow as much as 27% in the fourth quarter.

The company predicts Q4 revenue could range between $1.74 billion and $1.84 billion, ahead of Wall Street predictions, with net profits of 89 cents and $1.01 per share (non-GAAP). More importantly, The Motley Fool reports, the company’s GAAP gross margins are expected to widen to a range of 41.8% to 43.8% in the fourth quarter, compared to 41.4% in Q3.

At one point, Onsemi stock touched a new 52-week high on Monday at $55.57 amid heavy trading of more than 20 million shares, before closing at $54.96, up $6.89 or 14.3%. Track the stock here.

“Even though our Q3 results and Q4 outlook significantly exceed expectations, we believe that we are just in the early innings of transforming the business,” El-Khoury told analysts on a conference call Monday. “As we make further progress in our transformation initiatives and as our Intelligent Power and Sensing design win ramp with automotive and industrial customers, we expect to see sustained revenue growth and margin expansion.”

El-Khoury also addressed the big issue that all companies face in 2021 — supply chain constraints.

“Looking forward, we expect demand to remain robust and outpace supply through most of 2022. We are selectively investing in our operations to relieve capacity bottlenecks for our strategic product lines while working with our foundry partners to obtain a higher allocation of capacity,” he said. “At the same time, we are shifting our production to strategic high-value mix of products… Along with expanding supply, we are working collaboratively with our customers to ensure uninterrupted supply of our products and we have entered into long-term supply agreements with many of them.”


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