With a sudden -1.8% drop to $91.1, ON Semiconductor has Wall Street wondering if its shares will keep moving past its target price of $95.79. With an average rating of buy, and analysts assigning target prices from 80.0 to 110.0 dollars per share, investors will be betting heavily on the Semiconductors stock's next move.
We can use ON Semiconductor's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since ON's short interest is 9.4%, the market sentiment is mixed on this stock.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on ON Semiconductor is to look at the percentage of institutions that are invested in the stock. In this case, 102.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
To sum up, ON Semiconductor is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a buy rating, an above average percentage of its shares sold short, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about ON:
The stock has trailing 12 month earnings per share (EPS) of $4.1
ON Semiconductor has a trailing 12 month Price to Earnings (P/E) ratio of 22.2 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 6.1 in contrast to the S&P 500's average ratio of 2.95
ON Semiconductor is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively