Selected stock price target news of the day - August 1st, 2023

By: Matthew Otto

ON Semiconductor’s Surpass Expectations with Growth in Automotive and Industrial Sectors

ON Semiconductor announced second quarter results for 2023 with a revenue of $2,094.4 million, flat year-over-year. Growth was primarily driven by the automotive and industrial sectors, with automotive revenue exceeding $1 billion (a 35% increase year-over-year) and industrial revenue of $609.3 million (a 5% increase year-over-year). Additionally, silicon carbide revenue grew nearly 4x compared to the previous year. Margins were also robust with both GAAP and non-GAAP gross margins at 47.4 percent.

The company’s results exceeded analysts’ expectations, reporting $1.33 earnings per share, excluding items, on $2.09 billion in revenue, as opposed to the estimated $1.21 earnings per share and $2.02 billion in revenue as polled by FactSet. The successful quarter and beating of analysts’ estimates led to a 2.5% increase in ON Semiconductor’s shares. The results showcase the company’s strength in focusing on automotive and industrial markets, and leveraging opportunities in silicon carbide, despite a challenging macroeconomic environment.

Varied Upgrades and Raised Price Targets Follow Strong Q2 2023 Results

Needham’s Quinn Bolton reiterates a Buy, holding firm at a $120 price target.
Joseph Moore of Morgan Stanley sustains an Equal-Weight and lifts the price target from $89 to $116.
Stifel’s Tore Svanberg keeps a Hold and elevates the price target from $98 to $105.
William Stein from Truist Securities continues with a Buy and boosts the price target from $93 to $122.
Christopher Rolland of Susquehanna upholds a Positive and hikes the price target from $115 to $130.
Goldman Sachs’ Toshiya Hari maintains a Buy and advances the price target from $95 to $106.
Tristan Gerra of Baird persists with an Outperform and augments the price target from $100 to $120.
Vivek Arya at B of A Securities sticks with a Buy and enhances the price target from $120 to $130.
David Williams from Benchmark carries on with a Buy and raises the price target from $110 to $125.
Mizuho’s Vijay Rakesh supports a Buy and increases the price target from $112 to $120.
BMO Capital’s Ambrish Srivastava maintains a Market Perform and upgrades the price target from $105 to $110.
Christopher Danely of Citigroup confirms a Buy and amplifies the price target from $118 to $125.
Keybanc’s John Vinh preserves an Overweight and lifts the price target from $110 to $125.

Analyst Toshiya Hari (GOLDMAN) has currently the highest performing score on ON with 6/6 (100%) price target fulfillment ratio. His price targets carry on average an $3.37 (11.79%) potential upside. On Semiconductor stock price reaches these price targets on average within 110 days.

ZoomInfo Reports Revenue Growth but Lowers Guidance

ZoomInfo announced its financial results for Q2 2023, reporting a 16% year-over-year revenue increase, reaching $308.6 million, and strong margins with a GAAP operating margin of 19% and an adjusted operating income margin of 41%. The company generated $116.7 million in cash flow from operations and $121.5 million in unlevered free cash flow. The quarter was marked by a partnership with Databricks to offer ZoomInfo’s B2B data, earning several industry awards, repurchasing 2,847,121 shares at an average price of $21.99, and closing with over 35,000 customers. The Board of Directors also approved a new $500 million share repurchase program.

However, despite positive growth, the company slightly missed Wall Street’s revenue consensus of $310.9 million and adjusted its guidance for the full year, reducing revenue and free cash flow projections. The new revenue guidance range is $1.225 billion to $1.235 billion, and non-GAAP free cash flow is now anticipated to be $445 million to $455 million.

ZoomInfo lowered guidance for the full year appears to be a significant point for investors and analysts, with the company projecting Q3 2023 revenue of $309 million to $312 million and adjusted profits of 24 to 25 cents a share, compared to analyst expectations of $325.8 million and 25 cents. The revision includes a decrease in the anticipated non-GAAP EPS forecast to 99 cents to $1 a share. While the quarter included growth and strategic milestones, the reduced guidance and revenue miss may raise concerns about the company’s near-term performance expectations.

Wall Street Analysts Adjust Lower to Match New Guidance

Canaccord Genuity’s David Hynes keeps Buy rating, reduces price target from $32 to $26.
Credit Suisse’s Richard Hill continues with Outperform, slashes price target from $32 to $26.
DA Davidson’s Gil Luria upholds Buy position, cuts price target from $40 to $34.
Truist Securities’ Terry Tillman holds at Hold, trims price target from $28 to $24.
Stifel’s Parker Lane persists with Buy, decreases price target from $30 to $27.
RBC Capital’s Rishi Jaluria sustains Sector Perform, diminishes price target from $28 to $22.
Goldman Sachs’ Kash Rangan maintains Buy, lowers price target from $34 to $30.
B of A Securities’ Koji Ikeda continues Neutral stance, revises price target from $30 to $28.
Mizuho’s Siti Panigrahi upholds Buy, cuts price target from $36 to $30.
Wells Fargo’s Michael Turrin maintains Overweight, trims price target from $34 to $28.
Raymond James’ Brian Peterson sticks to Outperform, reduces price target from $28 to $26.
Barclays’ Raimo Lenschow persists with Overweight, lowers price target from $34 to $25.
Needham’s Joshua Reilly reiterates Buy, holds $35 price target steady.
Deutsche Bank’s Brad Zelnick downgrades to Hold, sets $20 price target.
Piper Sandler’s Brent Bracelin maintains Overweight, revises price target from $30 to $26.

Analyst Taylor Mcginnis (UBS) has currently the highest performing score on ZI with 7/12 (58.33%) price target fulfillment ratio. His price targets carry on average an $7.9 (20.25%) potential upside. ZoomInfo stock price reaches these price targets on average within 48 days.

Varonis Express Confidence for 2024 Outlook

Varonis Systems reported its Q2 2023 financial results, falling short of analyst expectations with a Q2 EPS of $0.01, $0.01 below the estimate, and revenue at $115.4 million versus the projected $119.14 million. Despite the 17% year-over-year growth in annual recurring revenues (ARR).

The company highlighted a significant shift towards a SaaS model, with 58% of new business and upsell ARR stemming from this sector. However, this transition has yet to prove itself, with total revenues and EPS missing the mark.

The GAAP operating loss widened to ($39.7) million, from ($37.6) million in the previous year, and non-GAAP operating income also declined. While the CEO expressed optimism about the SaaS transition, the figures reflect a company still grappling with the shift and continued macro headwinds.

Varonis Systems expects revenues of $123.5 million to $127.0 million for the third quarter of 2023, indicating year-over-year growth of 0% to 3%. The company also projects a non-GAAP operating income ranging from $1.0 million to $2.0 million. Additionally, non-GAAP net income per diluted share is anticipated to be in the range of $0.02 to $0.03, based on 127.1 million diluted shares outstanding.

Full Year 2023 Outlook:

For the full fiscal year of 2023, Varonis Systems has updated its expectations. The company now forecasts annual recurring revenues (ARR) of $529.0 million to $535.0 million, translating to year-over-year growth of 14% to 15%. Free cash flow is expected to be between $40.0 million to $45.0 million. Revenues for the year are projected at $497.0 million to $503.0 million, reflecting a growth of 5% to 6% compared to the previous year. The non-GAAP operating income is anticipated to be within the range of $19.0 million to $22.0 million, and non-GAAP net income per diluted share is projected to be between $0.21 to $0.23, with 126.8 million diluted shares outstanding.

Analysts’ Varied Opinions on Varonis Systems

DA Davidson’s Rishi Jaluria upholds a Buy rating, and boosts the price target from $30 to $35.
Morgan Stanley’s Hamza Fodderwala continues with an Equal-Weight stance, and elevates the price target from $24 to $34.
Stephens & Co.’s Brian Colley reaffirms with an Overweight rating, and keeps the price target steady at $32.
Wedbush’s Daniel Ives holds a Neutral position, but increments the price target from $28 to $32.
TD Cowen’s Shaul Eyal sustains an Outperform rating, and enhances the price target from $35 to $37.
Piper Sandler’s Rob Owens preserves a Neutral rating, and lifts the price target from $25 to $30.
RBC Capital’s Matthew Hedberg maintains an Outperform rating, and augments the price target from $30 to $35.
Baird’s Shrenik Kothari persists with a Neutral rating, and escalates the price target from $30 to $32.
Wells Fargo’s Andrew Nowinski adheres to an Equal-Weight rating, and advances the price target from $26 to $29.
Craig-Hallum’s Chad Bennett upgrades from Hold to Buy and introduces a $35 price target.
Barclays’ Saket Kalia supports an Equal-Weight rating, and raises the price target from $30 to $35.

Analyst Saket Kalia (BARCLAYS) has currently the highest performing score on VRNS with 28/33 (84.85%) price target fulfillment ratio. His price targets carry on average an $2.88 (14.94%) potential upside. Varonis Systems stock price reaches these price targets on average within 74 days.