When insiders are buying company stock, it’s often worth taking a closer look. These individuals tend to have superior knowledge of their firms’ operating activities which means that their trades can provide clues about future stock performance.
In this report, we are going to highlight some interesting insider buying at ON Semiconductor Corp (ON:US). ON Semiconductor is a leading semiconductor manufacturer that serves tens of thousands of customers across hundreds of markets. The company operates 22 manufacturing sites in 10 countries and has 43 design centers in 19 countries. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $19.5 billion.
ON Semiconductor: Insider Buying
Our insider transaction data shows that on 7 September, board member Gregory Waters bought 17,000 ON shares at a price of $45.26 per share. This purchase cost the insider approximately $770,000 and increased his total holding to 25,175 shares.
Mr. Waters has a considerable level of experience in the semiconductor industry. Previously, he served as President and Chief Executive Officer of semiconductor manufacturer Integrated Device Technology (IDTI). Prior to joining IDTI, he served as Executive Vice President of Skyworks Solutions, Inc., a global leader of semiconductors for mobile communications systems. This experience means he is likely to have a good read on the industry and ON Semiconductor’s future prospects.
What stands out about this trade is the size of the purchase. Not only is it large in nominal terms but it is also large in relative terms. Our data shows that it has increased the size of his position by 208%. This suggests the insider is very confident the stock is set to rise.
Record Revenue and Earnings
ON Semiconductor recently posted a strong set of Q2 results.
For the quarter, revenue came in at a record $1.7 billion, up 38% year on year. Meanwhile, non-GAAP diluted earnings per share came in at a record $0.63, compared to $0.12 in the quarter a year earlier.
Looking ahead, the company said that it expects to generate revenue of between $1.66 billion and $1.76 billion in Q3 along with adjusted EPS of between $0.68 and $0.80. Analysts had been expecting revenue of $1.61 billion and adjusted EPS of $0.51.
“We continue to see accelerating demand for our products in our strategic automotive and industrial end-markets. As we continue to drive operational efficiencies in our manufacturing sites, we expect to see incremental supply and revenue growth in the second half of 2021,” commented CEO Hassane El-Khoury.
On the back of these results, a number of brokers raised their price targets for the stock. The average price target is now $53 – about 18% above the current share price.
In light of these developments, we see the insider buying here as a bullish indicator.