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UPDATE: Bank Of America Reiterates On ON Semiconductor Following Investor Meetings

Dwight Einhorn

In a report published Monday, Bank of America analyst Vivek Arya reiterated a Buy rating on ON Semiconductor (NASDAQ: ONNN), and raised the price target from $10.00 to $11.00.

In the report, Bank of America noted, “We hosted ON Semi CEO Keith Jackson, CFO Bernard Gutmann and IR Parag Agarwal for investor meetings in NY. Key messages: 1) improving demand, lean channels; 2) underappreciated TAM expansion and confidence in integrating Aptina acquisition; 3) continued progress at Sanyo; and 4) continued buybacks.

We raise est/PO to $11 from $10 to reflect Aptina, and recommend ONNN as a relative pair against Underperform-rated peer Fairchild. ONNN trades at ~10x 2015 PE/6.4x EBITDA, well below FCS's 22x PE/6.8x EBITDA, despite ONNN's superior margins and mix of long-cycle industrial/autos revenue. Smooth integration of Aptina in 2H should increase investor confidence/catalyze higher PE multiples.”

ON Semiconductor closed on Friday at $9.13.

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