Lidar, which stands for Light Detection and Ranging, is a technology that uses imaging to create real-time three-dimensional maps of its surroundings. A lidar sensor works by emitting pulsed laser waves, which bounce back from objects. The technology has applications in land mapping, autonomous cars, smartphones, and cameras.
According to Fortune Business Insights, the global Lidar market size is projected to reach $6.71 billion by 2026, growing at a CAGR of 22.7%.
Given this backdrop, two semiconductor companies operating in the lidar industry, ON Semiconductor Corporation (ON) and Allegro MicroSystems, Inc. (ALGM), could be solid bets. ON offers a wide range of lidar development platforms and tools, while ALGM operates in the industry through its acquisition of Voxtel, an advanced photonic and 3D imaging technology company, in 2020.
ON Semiconductor Corporation (ON)
ON is a global provider of power and sensing technologies. The company operates through the three broad segments of Power Solutions Group; Advanced Solutions Group; and Intelligent Sensing Group. Its offerings include metal-oxide-semiconductor field-effect transistors (MOSFET).
On November 4, SensiML™ Corporation, a QuickLogic Corporation (QUIK) subsidiary, announced that it has teamed up with ON for providing machine learning solutions pertaining to autonomous sensor data processing and predictive modeling. The company might stand to benefit from this collaboration.
On November 1, ON announced that it had completed its silicon carbide (SiC) producer GT Advanced Technologies (GTAT) acquisition. The acquisition is expected to boost the company’s SiC technology capabilities.
For the fiscal third quarter ended October 1, ON’s revenue increased 32.2% year-over-year to $1.74 billion. Non-GAAP net income attributable to ON and non-GAAP EPS came in at $380.30 million and $0.87, up 240.2% and 222.2% from the prior-year quarter, respectively.
The consensus EPS estimate of $0.94 for the quarter ended December 2021 indicates a 168.6% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $1.79 billion reflects an improvement of 23.8% from the same period the prior year. Moreover, ON has an impressive surprise earnings history as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 62.5% over the past year and 52.7% over the past six months to close yesterday’s trading session at $59.65.
ON’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ON has a Growth grade of A and a Value and Momentum grade of B. In the 100-stock Semiconductor & Wireless Chip industry, it is ranked #41. The industry is rated A. Click here to see the additional POWR Ratings for ON (Stability, Sentiment, and Quality).
Allegro MicroSystems, Inc. (ALGM)
ALGM operates as a designer, developer, manufacturer, and seller of sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. The company operates in the U.S, the rest of the Americas, Europe, and Asian markets.
On January 18, ALGM unveiled its new wheel speed and distance sensor for use in emerging applications in advanced driver assistance systems (ADAS). In the same month, the company unveiled its 3D sine/cosine Hall-effect position sensor IC, which is the smallest of its kind available in the market and offers system designers a cost-effective solution for automotive and industrial applications and a quick time to market. The new products are expected to add to the company’s revenue stream.
ALGM’s total net sales increased 13.5% year-over-year to $186.63 million in the fiscal third quarter ended December 24. Non-GAAP net income rose 57.1% from the prior-year quarter to $36.09 million, while non-GAAP EPS improved 46.2% from the prior-year period to $0.19.
Analysts expect ALGM’s EPS to rise 33.3% year-over-year to $0.20 for the quarter ending March 2022. Likewise, Street expects the company’s revenue to increase 11.2% from the prior-year period to $194.80 million. In addition, ALGM has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Over the past five days, the stock has gained 7.4% to close yesterday’s trading session at $28.69. It has gained 4.7% over the past six months.
It’s no surprise that ALGM has an overall B rating, which translates to Buy in our POWR Rating system. ALGM has a B grade for Growth, Momentum, Sentiment, and Quality. It is ranked #20 in the same industry.
To see the additional POWR Ratings for Value and Stability for ALGM, click here.
ON shares were trading at $60.87 per share on Wednesday afternoon, up $1.22 (+2.05%). Year-to-date, ON has declined -10.38%, versus a -3.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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