Morning Bid: Crude awakening By Reuters
Market Overview: Global markets are experiencing a quiet start to the week due to multiple holidays, while oil prices have dropped over 2% following OPEC+'s decision to increase production amidst uncertain demand.
Political and Economic Developments: President Trump announced a 100% tariff on foreign films, expressed his intention to keep Jerome Powell as Fed Chairman, and emphasized trade negotiations with China; meanwhile, Australia's Prime Minister Albanese secured a second term amid concerns over U.S. influence.
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Onsemi Approaches a Breakout, Supported by Potential Free Cash Flow
Mixed Earnings Report: Onsemi's Q4 2025 earnings report showed mixed results, with revenue falling short of market expectations, but the company affirmed its return to growth and anticipated improvements in margins and cash flow.
Strong Cash Flow and Buybacks: The company reported a record free cash flow margin for 2025, enabling it to utilize 100% of this cash for share buybacks, which is expected to strengthen share prices.
Segment Performance: The Intelligent Sensing Group performed strongly with a 9% year-over-year growth, while other segments like Power Solutions and Analog & Mixed Signal faced challenges, leading to overall mixed performance.
Analyst Sentiment: Analysts have mixed sentiments about Onsemi, with some price target reductions offset by upgrades, indicating a generally favorable outlook for the stock, which is considered fairly valued near its critical resistance point.
Analysts Adjust Ratings on Semiconductor and AI Infrastructure Stocks
- Celestica Upgrade: Analyst Danil Sereda upgraded Celestica (CLS) from Hold to Buy following strong Q4 results and record hyperscaler bookings, projecting CCS segment revenue to reach $7 billion by 2027, indicating robust growth potential in the market.
- ON Semiconductor Rating Change: Tech Stock Pros upgraded ON Semiconductor (ON) from Sell to Hold, noting mixed Q4 results but signs of stabilization in automotive and industrial markets, suggesting the company is moving towards a healthier position post-inventory correction, although EV demand recovery remains critical.
- RTX Corporation Downgrade: The Value Portfolio downgraded RTX Corporation (RTX) from Buy to Sell, citing a high P/E ratio near 30x with only mid-single-digit growth projected, alongside political risks that could impact margins and future returns for defense contractors.
- Varonis Systems Downgrade: May Investing Ideas downgraded Varonis Systems (VRNS) from Buy to Hold, highlighting decelerating SaaS ARR growth and stagnant net retention rates, indicating that tangible improvements are necessary before the stock becomes attractive again.
Analysis of Significant Stock Movements Among Companies
- Amentum Holdings Decline: Amentum Holdings' stock fell approximately 12% after fiscal Q1 revenue and adjusted EBITDA missed Wall Street analysts' consensus estimates, indicating market concerns over its financial performance and potential future financing capabilities.
- BP Suspends Buyback: BP Plc suspended its stock buyback program to strengthen its balance sheet, resulting in a 6% drop in its ADRs in the U.S., reflecting the company's cautious approach amid market volatility.
- ZoomInfo Downgrade: ZoomInfo Technologies forecasted first-quarter earnings per share between 25 to 27 cents, below analysts' expectations of 27 cents, leading to a 10% decline in its stock price, which may affect market confidence and investor sentiment.
- Ichor Holdings Surge: Ichor Holdings' shares soared 37% to a 52-week high due to strong demand driving a fourth-quarter earnings beat, highlighting the recovery potential in the semiconductor equipment market.
Major Earnings Reports Expected After Monday's Close
- Major Earnings Preview: After the market closes on Monday, key companies such as Prospect Capital Corporation (PSEC), ON Semiconductor Corporation (ON), PennantPark Floating Rate Capital Ltd. (PFLT), and The Goodyear Tire & Rubber Company (GT) are set to release their earnings, which could significantly impact market sentiment.
- Upwork Earnings Release: Upwork (UPWK) is another notable company reporting on Monday, and its performance will be closely watched by investors, potentially influencing its stock price and perceptions of the online labor market.
- Additional Earnings Reports: Other companies scheduled to report after Monday's close include ACGL, ACM, AMKR, BRX, CHGG, CINF, CRBG, DAC, GTM, ICHR, KRC, MEDP, MTW, NTB, PFG, PNNT, SSD, SVM, UDR, and VNO, which may trigger market volatility.
- Earnings Season Calendar: Investors can access the full earnings season calendar through Seeking Alpha to better navigate market dynamics and identify investment opportunities.
GLOBALFOUNDRIES INC: MORGAN STANLEY INCREASES TARGET PRICE FROM $35.00 TO $43.00
Morgan Stanley Raises Target Price: Morgan Stanley has increased its target price for a specific stock to $43.00 from $35.00.
Market Implications: This adjustment reflects a positive outlook on the stock's performance and potential growth in the market.
On Semiconductor Reports Mixed Q4 Earnings Amid Market Stabilization
- Earnings Performance: On Semiconductor reported a fourth-quarter EPS of 64 cents, surpassing the Wall Street estimate of 62 cents, indicating stability in profitability despite mixed results.
- Revenue Results: The quarterly revenue of $1.53 billion fell short of the consensus estimate of $1.536 billion and decreased from $1.72 billion year-over-year, highlighting a softening market demand.
- Market Outlook: CEO Hassane El-Khoury noted signs of stabilization in key markets, with expectations for first-quarter adjusted EPS ranging from 56 to 66 cents, slightly above the analyst estimate of 61 cents, suggesting cautious optimism.
- Stock Reaction: On Semiconductor shares fell 3.5% to $62.85 in pre-market trading, reflecting a cautious market sentiment despite the earnings beat, indicating investor concerns over revenue shortfalls.
Onsemi Approaches a Breakout, Supported by Potential Free Cash Flow
Mixed Earnings Report: Onsemi's Q4 2025 earnings report showed mixed results, with revenue falling short of market expectations, but the company affirmed its return to growth and anticipated improvements in margins and cash flow.
Strong Cash Flow and Buybacks: The company reported a record free cash flow margin for 2025, enabling it to utilize 100% of this cash for share buybacks, which is expected to strengthen share prices.
Segment Performance: The Intelligent Sensing Group performed strongly with a 9% year-over-year growth, while other segments like Power Solutions and Analog & Mixed Signal faced challenges, leading to overall mixed performance.
Analyst Sentiment: Analysts have mixed sentiments about Onsemi, with some price target reductions offset by upgrades, indicating a generally favorable outlook for the stock, which is considered fairly valued near its critical resistance point.
Analysts Adjust Ratings on Semiconductor and AI Infrastructure Stocks
- Celestica Upgrade: Analyst Danil Sereda upgraded Celestica (CLS) from Hold to Buy following strong Q4 results and record hyperscaler bookings, projecting CCS segment revenue to reach $7 billion by 2027, indicating robust growth potential in the market.
- ON Semiconductor Rating Change: Tech Stock Pros upgraded ON Semiconductor (ON) from Sell to Hold, noting mixed Q4 results but signs of stabilization in automotive and industrial markets, suggesting the company is moving towards a healthier position post-inventory correction, although EV demand recovery remains critical.
- RTX Corporation Downgrade: The Value Portfolio downgraded RTX Corporation (RTX) from Buy to Sell, citing a high P/E ratio near 30x with only mid-single-digit growth projected, alongside political risks that could impact margins and future returns for defense contractors.
- Varonis Systems Downgrade: May Investing Ideas downgraded Varonis Systems (VRNS) from Buy to Hold, highlighting decelerating SaaS ARR growth and stagnant net retention rates, indicating that tangible improvements are necessary before the stock becomes attractive again.
Analysis of Significant Stock Movements Among Companies
- Amentum Holdings Decline: Amentum Holdings' stock fell approximately 12% after fiscal Q1 revenue and adjusted EBITDA missed Wall Street analysts' consensus estimates, indicating market concerns over its financial performance and potential future financing capabilities.
- BP Suspends Buyback: BP Plc suspended its stock buyback program to strengthen its balance sheet, resulting in a 6% drop in its ADRs in the U.S., reflecting the company's cautious approach amid market volatility.
- ZoomInfo Downgrade: ZoomInfo Technologies forecasted first-quarter earnings per share between 25 to 27 cents, below analysts' expectations of 27 cents, leading to a 10% decline in its stock price, which may affect market confidence and investor sentiment.
- Ichor Holdings Surge: Ichor Holdings' shares soared 37% to a 52-week high due to strong demand driving a fourth-quarter earnings beat, highlighting the recovery potential in the semiconductor equipment market.
Major Earnings Reports Expected After Monday's Close
- Major Earnings Preview: After the market closes on Monday, key companies such as Prospect Capital Corporation (PSEC), ON Semiconductor Corporation (ON), PennantPark Floating Rate Capital Ltd. (PFLT), and The Goodyear Tire & Rubber Company (GT) are set to release their earnings, which could significantly impact market sentiment.
- Upwork Earnings Release: Upwork (UPWK) is another notable company reporting on Monday, and its performance will be closely watched by investors, potentially influencing its stock price and perceptions of the online labor market.
- Additional Earnings Reports: Other companies scheduled to report after Monday's close include ACGL, ACM, AMKR, BRX, CHGG, CINF, CRBG, DAC, GTM, ICHR, KRC, MEDP, MTW, NTB, PFG, PNNT, SSD, SVM, UDR, and VNO, which may trigger market volatility.
- Earnings Season Calendar: Investors can access the full earnings season calendar through Seeking Alpha to better navigate market dynamics and identify investment opportunities.
GLOBALFOUNDRIES INC: MORGAN STANLEY INCREASES TARGET PRICE FROM $35.00 TO $43.00
Morgan Stanley Raises Target Price: Morgan Stanley has increased its target price for a specific stock to $43.00 from $35.00.
Market Implications: This adjustment reflects a positive outlook on the stock's performance and potential growth in the market.
On Semiconductor Reports Mixed Q4 Earnings Amid Market Stabilization
- Earnings Performance: On Semiconductor reported a fourth-quarter EPS of 64 cents, surpassing the Wall Street estimate of 62 cents, indicating stability in profitability despite mixed results.
- Revenue Results: The quarterly revenue of $1.53 billion fell short of the consensus estimate of $1.536 billion and decreased from $1.72 billion year-over-year, highlighting a softening market demand.
- Market Outlook: CEO Hassane El-Khoury noted signs of stabilization in key markets, with expectations for first-quarter adjusted EPS ranging from 56 to 66 cents, slightly above the analyst estimate of 61 cents, suggesting cautious optimism.
- Stock Reaction: On Semiconductor shares fell 3.5% to $62.85 in pre-market trading, reflecting a cautious market sentiment despite the earnings beat, indicating investor concerns over revenue shortfalls.
