ON Semiconductor Corp. (OnSemi) shares dropped as much as 1.5% as markets opened on Wednesday after the company unveiled a restructuring plan to cut costs across all business units, including its global manufacturing operations.

The restructuring, approved by management, is intended to align spending with current business trends while keeping the company on track toward its long-term financial targets.

OnSemi will reduce its global workforce by approximately 2,400 as part of the plan. Subject to local labor laws and regulations, the company expects the layoffs to be completed by 2025.

The company estimates it will incur between $50 million and $60 million in charges related to severance, benefits, payroll taxes, and other expenses. OnSemi expects the majority of these costs to be recorded in 2025. 

Once completed, the restructuring is projected to generate annualized savings of between $105 million and $115 million.

However, the company warned that these estimates are based on assumptions and that results may vary. Additional unforeseen costs tied to the restructuring could also emerge.

OnSemi Sentiment and Message Volume on Feb.26 as of 9:10 a.m. ET | Source: Stocktwits

After the announcement, retail sentiment on Stocktwits remained in the ‘extremely bullish’ zone.

The restructuring follows weaker-than-expected fourth-quarter results and first-quarter guidance. This prompted multiple analysts to lower their price targets, which led to the stock price declining to a two-year low.

Morgan Stanley analyst Joseph Moore cut the firm’s price target on ON Semiconductor from $52 to $44, maintaining an ‘Underweight’ rating, according to TheFly. 

Moore noted that the company’s March-quarter guidance was “well below” estimates and that increasing revenue headwinds cast doubt on gross margin recovery.

Despite the recent downturn, the average analyst price target on ON Semiconductor remains $61.04, implying a potential 19% upside from current levels, according to Koyfin data.

ON’s stock is down 19% year-to-date and has fallen 32% over the past six months.

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