Why onsemi’s Upcoming Earnings Could Flip Your Portfolio – Beware the Hidden Dip

• onsemi beat revenue forecasts last quarter despite a 12% YoY drop.
• Analysts expect a 10.9% YoY revenue decline this quarter, but the beat could be larger.
• Peers Skyworks and Power Integrations posted mixed results, hinting at market sentiment.
• Sector momentum: analog semiconductor stocks have rallied ~9.6% in the past month.
• Current price target $63.50 vs. market price $65.26 – a modest discount.

You’ve been overlooking onsemi’s earnings calendar, and that could cost you big.

Why onsemi’s Revenue Trend Beats the Analog Chip Downturn

Onsemi delivered $1.55 billion in Q4 revenue, a 2.2% beat of analyst expectations, even though the top line slipped 12% year‑over‑year. The modest beat is significant because the analog semiconductor segment has been under pressure from macro‑economic headwinds, inventory correction cycles, and a slowdown in automotive demand. While the broader market expects a 10.9% YoY decline to $1.54 billion this quarter, onsemi’s historical ability to exceed consensus by an average of 0.9% suggests a possible upside surprise.

Two key drivers underpin this resilience:

• Product Mix Shift: Onsemi’s power management and sensor solutions have higher margins than legacy analog blocks, cushioning revenue pressure.
• Strategic Partnerships: Recent collaborations with electric‑vehicle OEMs have locked in multi‑year supply agreements, providing a revenue floor.

Investors should weigh the likelihood that management will lean on these growth levers to narrow the forecasted decline.

How Peers Skyworks and Power Integrations Set the Benchmark

Skyworks Solutions posted a 3.1% YoY revenue dip but beat forecasts by 3.4%, sending the stock up 5.5% on the day. Power Integrations, by contrast, posted a 1.9% decline that matched expectations, leaving its share price flat. Both firms operate in the same analog space, and their results provide a real‑time barometer for onsemi’s upcoming numbers.

Key takeaways from the peer data:

• Skyworks’ beat came from strong performance in its wireless connectivity segment, highlighting the upside potential of niche sub‑markets.
• Power Integrations’ in‑line result suggests that not every analog player can extract a premium; execution matters.
• Market reaction to peer beats has been swift, indicating that investors are primed to reward any surprise on onsemi’s side.

Historical Earnings Patterns: onsemi’s Consistent Top‑Line Surprises

Over the past two years, onsemi has missed Wall Street’s revenue estimate only once. The average revenue beat sits at +0.9%, while adjusted operating income and EPS have routinely outperformed consensus. This track record is a rare commodity in a sector where earnings volatility is the norm.

When the company missed expectations in Q2 2022, the share price fell 8% over three days, but a subsequent beat in Q3 2022 recovered the loss and added an extra 12% upside. The pattern demonstrates that onsemi’s earnings surprises tend to be short‑lived, creating a tactical entry point for contrarian investors.

Technical Corner: Decoding Adjusted Operating Income and EPS Beats

Adjusted Operating Income strips out one‑time items such as restructuring charges and stock‑based compensation, providing a clearer view of core profitability. onsemi’s recent beat indicates that its operational efficiency is improving despite lower sales.

Earnings Per Share (EPS) reflects net profit divided by outstanding shares. A beat here signals that bottom‑line growth is outpacing the market’s expectations, often translating into short‑term price appreciation.

For analysts, a simultaneous beat on both metrics is a red flag that the company may be undervalued relative to its peers.

Investor Playbook: Bull vs. Bear Cases Ahead of the Report

Bull Case

• Revenue beats forecast by >5%, narrowing the projected YoY decline to under 7%.
• Adjusted operating income rises >8% YoY, indicating margin expansion.
• Analyst price target revisions push the fair value to $70+, creating upside of ~7% from the current $65.26.
• Sector rally continues; analog chip stocks gain an average of 9.6% over the month.

Bear Case

• Revenue misses consensus, confirming the 10.9% YoY decline, pressuring the stock.
• Operating income contracts due to higher R&D spend without immediate top‑line lift.
• Price target stays at $63.50, widening the discount to ~3% and triggering profit‑taking.
• Broader semiconductor inventory correction intensifies, dragging the entire segment.

Strategic positioning:

• Consider a small‑to‑medium sized call option on onsemi if you anticipate a beat, capping downside while leveraging upside.
• For risk‑averse investors, a modest stop‑loss at $60 can protect against a miss while preserving capital for a potential rebound.

Bottom line: onsemi’s earnings season is a high‑conviction moment. The company’s historical beat record, peer performance, and sector momentum create a compelling case for a tactical play, but investors must stay disciplined around the downside risks.