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Zacks Analyst Blog Highlights ON Semiconductor, NeoPhotonics, Analog Devices and Semtech

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Chicago, IL – May 9, 2022 – announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: ON Semiconductor Corp. ON, NeoPhotonics Corp. NPTN, Analog Devices ADI and Semtech Corp. TCMS.

Here are highlights from Friday’s analyst blog:

4 stocks to buy on Semiconductor’s soaring earnings

The dream race for the semiconductor industry continues into 2022 as higher demand drives sales as the supply crisis is far from over. Strong demand for 5G devices, automobiles and electronics has pushed demand for semiconductors, causing manufacturers to struggle to supply microchips.

This saw semiconductor sales jump in the first quarter of 2022, helped by robust sales in each of the three months. In addition, forecasts indicate that semiconductor revenues will hit an all-time high this year. Given this situation, actions like ON Semiconductor Corp., NeoPhotonics Corp., Analog devices and Semtech Corp. should benefit from it in the short term.

Soaring Semiconductor Sales

The Semiconductor Industry Association (SIA) said on May 1 that global semiconductor sales rose 23% in the first quarter on a yearly basis to $151.7 billion. Although down 0.5% in the fourth quarter of 2021, the semiconductor industry is on solid footing, with sales increasing every month.

Month-over-month sales rose 1.1% in March to $50.6 billion. Semiconductor sales have now increased in all three months of the year. The association also said in its report that sales rose in all major markets in March year-over-year.

Sales increased by 25.7% in Europe, 20.4% in Japan and 17.9% in the Asia-Pacific region. China recorded a 17.3% jump in sales.

The booming semiconductor industry

The demand for semiconductors has exploded in recent years. As more people stayed home to work and learn during the COVID-19 pandemic, demand for electronic goods, networking and communication equipment soared. This boosted semiconductor sales.

The demand for microchips is expected to increase as the Internet of Things, artificial intelligence (AI) and virtual reality gain traction. The development of these advanced technologies depends on semiconductor technology. As a result, the demand for semiconductors is expected to rise in the near future as the need for these services grows.

Increased demand for 5G devices is also benefiting microchip sales, with unit production more than tripling to 555 million in 2021 from 250 million in 2020.

According to a Gartner report, global semiconductor revenues are expected to reach $676 billion in 2022, jumping 13.6% year-over-year. Growing demand for semiconductors will be the main driver of revenue growth.

On total growth, semiconductor revenues from smartphones are expected to increase by 15.2% in 2022, while 5G smartphone production units are expected to increase by 45.3% this year.

While the growing demand for semiconductors is helping manufacturers earn more revenue, it is also creating a new hurdle for them as they struggle to meet demand. The automotive industry has been hit hard in 2021 due to this increased demand for semiconductors, prompting them to curtail production.

As a result, there is a severe supply shortage, forcing many companies to increase production. However, the semiconductor shortage crisis is far from over and is expected to last through the rest of the year. This will only benefit the industry as demand is expected to remain strong.

Our choices

Here we present four smart stocks that investors could benefit from in the current scenario.

ON Semiconductor Corp. is a supplier of broadband and power management integrated circuits and standard semiconductors used in many advanced devices ranging from high-speed fiber optic networking equipment to precise power management functions found in portable electronics. ON’s products provide clock management and data flow management for precision computing and communication systems, as well as power management for power distribution and monitoring of various components. in virtually all electronic devices.

ON Semiconductor’s expected profit growth rate for the current year is 60%. The Zacks consensus estimate for current-year revenue has improved 18% over the past 60 days. ON holds a Zacks rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Analog devices is an original equipment manufacturer of semiconductor devices, particularly analog, mixed-signal and DSP integrated circuits. The ADI product line consists of amplifiers and comparators; analog-to-digital converters; digital to analog converters; video encoders and decoders; embedded processing and DSP products; MEMS and temperature sensors; RF/IF components and converters; Power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices has manufacturing sites in the United States, Ireland and Southeast Asia.

Analog Devices’ expected profit growth rate for the current year is 30.5%. The Zacks consensus estimate for current-year earnings has improved 1.3% over the past 60 days. ADI wears a Zacks rank #2.

NeoPhotonics Corp. is engaged in the design and manufacture of photonic integrated circuit, or PIC, modules and subsystems for high-speed, bandwidth-intensive communication networks. NPTN offers broadband products that enable data transmission at 10 Gbps, 40 Gbps, and 100 Gbps, as well as agility products such as ROADMs that dynamically allocate bandwidth to accommodate volatile traffic patterns. NeoPhotonics Corporation also manufactures access products that provide high-speed connections to more devices and people on fixed and wireless networks.

NeoPhotonics’ expected earnings growth rate for the current year is over 100%. The Zacks consensus estimate for current year revenue has improved 25% over the past 60 days. NPTN sports a No. 1 Zacks rank.

Semtech Company designs, manufactures and markets a wide range of analog and mixed-signal semiconductors for commercial applications. SMTC’s product line includes Signal Integrity Products, Protection Products, Power and High Reliability Products, Wireless and Sensing Products, and Systems Innovation Group. Semtech Corporation devices are used in a variety of applications including computing, communications, industrial, military aerospace and automotive.

Semtech Corporation’s forecast earnings growth rate for the current year is 29.5%. The Zacks consensus estimate for current-year revenue has improved 8% over the past 60 days. SMTC sports a #1 Zacks rank.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit for more information on the performance figures displayed in this press release.

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