ON Semiconductor Corp LONG
Long from $22.70
Market Cap - 10.41B
ROE - 21.88%
Projected Sales Growth - 2.38%
- On has seen a strength in demand across most end markets as shown in its bookings trend over the last four quarters. Distributor inventories increased in the last quarters and re-sales remain strong.
- Their automotive segment is a strong growth driver – share gains, unit growth, attractive product offerings, contributes to revenues.
- They are very active in M&A. the companies acquisitions of AMI semiconductor, CMOS image sensor business unit, Analog Devices power PC controller business, CMD, Catalyst, SANYO Semiconductor and Sound Design gave it a new scope of technical capabilities. Some products and higher margin products expose to new markets and greater product range. The acquisition of Fairchild’s semiconductor international makes it the leader in the power semiconductor industry helping them diversify across a huge range of markets with a main focus on smart phones, automotive and industrial end markets. ON has successfully managed to integrate big acquisitions like AMI semiconductors in the past so it shouldn’t have any problems with the integration of Fairchild. Management expects the Fairchild acquisition to be an immediate boost to non GAAP earnings and free cash flow. Annual cost savings of at least 150m are expected within 18 months.
- ON has a very well diversified business and the company looks to generate a significant percentage of revenues from each sector it is involved in. With this diversification it smooths over the impact of seasonality resulting in balanced growth throughout the year.
- Main risks would be the 12 month P/E ratio of 21.09 vs industry average of 16.63 and its significant debt burden
NeroTree Capital rates ON Semiconductor Corp as a BUY with a price target of $30 in the next 52w.
Market Cap - 10.41B
ROE - 21.88%
Projected Sales Growth - 2.38%
- On has seen a strength in demand across most end markets as shown in its bookings trend over the last four quarters. Distributor inventories increased in the last quarters and re-sales remain strong.
- Their automotive segment is a strong growth driver – share gains, unit growth, attractive product offerings, contributes to revenues.
- They are very active in M&A. the companies acquisitions of AMI semiconductor, CMOS image sensor business unit, Analog Devices power PC controller business, CMD, Catalyst, SANYO Semiconductor and Sound Design gave it a new scope of technical capabilities. Some products and higher margin products expose to new markets and greater product range. The acquisition of Fairchild’s semiconductor international makes it the leader in the power semiconductor industry helping them diversify across a huge range of markets with a main focus on smart phones, automotive and industrial end markets. ON has successfully managed to integrate big acquisitions like AMI semiconductors in the past so it shouldn’t have any problems with the integration of Fairchild. Management expects the Fairchild acquisition to be an immediate boost to non GAAP earnings and free cash flow. Annual cost savings of at least 150m are expected within 18 months.
- ON has a very well diversified business and the company looks to generate a significant percentage of revenues from each sector it is involved in. With this diversification it smooths over the impact of seasonality resulting in balanced growth throughout the year.
- Main risks would be the 12 month P/E ratio of 21.09 vs industry average of 16.63 and its significant debt burden
NeroTree Capital rates ON Semiconductor Corp as a BUY with a price target of $30 in the next 52w.
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