B.Riley upgrades ON Semiconductor stock rating on growth outlook By Investing.com

B.Riley upgraded ON Semiconductor to Buy from Neutral and raised its price target to $115 from $64, implying 27% upside from the current $88.99 share price. The firm expects in-line Q1 2026 results and Q2 guidance on May 4, citing emerging growth positives and progress in exiting non-core revenue streams. B.Riley said the stock still screens cheap at 20x consensus 2027 earnings despite a 143% gain over the past year and 64% year-to-date.

Analysis

The key takeaway is not the rating change itself, but the signal that ON is moving from a cyclical laggard to a clearer secular compounder. If management can show that gross margin is being sustained while non-core revenue is exiting, the market may start valuing ON less like a mid-cycle analog/component supplier and more like a power-systems franchise with higher durability. That matters because the rerating path is likely to come from multiple expansion, not just earnings revisions, and the catalyst window is the next two quarters rather than the next two years.

The second-order winner is the broader power semiconductor complex: a stronger ON print would validate demand for AI power, industrial electrification, and automotive content recovery, which should lift sentiment across comparable names with similar end-market exposure. The risk is that the upgrade is late-cycle enthusiasm into a stock that has already done most of the easy work; if guidance is merely in-line, the multiple could compress quickly because expectations have likely moved ahead of fundamentals. In that case, the stock may trade more on order-book commentary and margin bridge than on headline EPS.

The more interesting contrarian angle is that the market may be underestimating buyback support as a volatility dampener rather than a pure upside driver. A large repurchase authorization can compress downside on any disappointment, but it can also cap near-term upside if the company uses strength to retire stock rather than signal aggressive capacity expansion. That creates a tactical setup where upside is real but probably asymmetrical only if management confirms that AI power exposure is becoming a larger mix driver and not just a narrative overlay.

ASND is likely a non-event here and may only matter as a reminder that there is no broad read-through to pharma; the real cross-asset implication is in semis. If lead times are extending and MOSFET availability is tightening, the best positioned suppliers are the ones with differentiated power IP and pricing power, while lower-quality peers risk chasing volume into weaker margins. That argues for selectivity: long the names with backlog visibility and capital-return support, avoid the names that need a broad semiconductor tape to keep the multiple elevated.

Key Decisions for Investors

• Long ON into the May 4 earnings report via common stock or a call spread; risk/reward is favorable if the company confirms guide stability and backlog strength, with a clean upside path toward the low-$100s, but trim aggressively if guidance is merely in-line.
• Pair trade: long ON / short a weaker power-semi peer with less buyback support and lower mix quality for a 1-3 month horizon; the thesis is that ON can rerate on quality-of-earnings while lower-tier names fade if sentiment broadens but fundamentals do not.
• For options, buy ON 2-4 month call spreads rather than outright calls; this captures a likely post-earnings drift while limiting premium burn if the stock consolidates after the run-up.
• Use any post-earnings gap higher to fade volatility if management does not materially raise the long-term growth narrative; the stock can be vulnerable to a 'good but not great' print given elevated expectations.
• Stay neutral ASND; no direct read-through from the semiconductor thesis, and the name should be treated as idiosyncratic unless broader market risk-off spills into high-duration healthcare.