- Onsemi’s significant transformation under CEO Hassane El-Khoury focuses on high-growth markets like EVs and industrial automation.
- The company’s vertical integration strategy, particularly in Silicon Carbide (SiC) technology, enhances cost efficiency and positions it as a key player in the SiC market.
- My valuation model estimates Onsemi’s stock at $114.5 per share, a 63% premium, indicating strong upside potential despite industry challenges and competition.
- Risks include high exposure to the automotive sector, growing competition from Chinese manufacturers, and geopolitical issues that could impact profitability.
Overview
On Semiconductor (NASDAQ:ON), also known by Onsemi, has been struggling (Figure 1) more than its peers. Q2 2024 revenue was $1.735 billion, a 17% decrease from the same quarter in 2023. Investing in high-growth opportunities across industries, employing a value investing approach that prioritizes robust business models and strategic foresight. Focusing on companies with the potential to profoundly influence the global landscape in the years aheadI primarily employ the discounted cash flow (DCF) valuation methodology, although I remain adaptable to various valuation techniques. Additionally, I leverage business model frameworks derived from institutions like Harvard Business School and other renowned universities for in-depth analysis. This approach ensures a comprehensive understanding of a company’s intrinsic value and strategic positioning within its industry landscape, facilitating informed investment decisions with a focus on long-term growth potential and risk mitigation.Educational background: MBA IESE Business School, University of Navarra and chartered financial analyst with CFA Institute.
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