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ON Semiconductor Corp (NASDAQ: ON) faces improving restructuring and autos tailwinds, according to BofA Securities.
The ON Semiconductor Analyst: Vivek Arya upgraded ON Semiconductor from Underperform to Buy, while raising the price target from $32 to $48.
The ON Semiconductor Thesis: The company’s new CEO and CFO could leverage their past turnaround experience to exit unprofitable areas, drive “a more asset-lite model” and achieve margin expansion, Arya said in the upgrade note.
“We are late to recognizing ON’s turnaround potential, but we still see potential for another 20%+ stock upside as management makes the case for turnaround at their upcoming Aug. 5 analyst day,” he added.
The analyst further mentioned that although it could take three to four quarters for ON Semiconductor’s restructuring efforts to “bear fruit,” there is potential for the company to:
Exit “low-margin consumer, industrial and communications products”
“Raise prices strategically”
Lower its capital expenditure towards 6%, in-line with its peers
Use lower cost 300mm fabs
ON Price Action: Shares of ON Semiconductor had risen by 2.88% to $41.43 at the time of publication Monday.
(Photo: ON Semiconductor)
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