UPDATE: Morgan Stanley Reiterates Underweight Rating, Raises PT on ON Semiconductor Corp. as Company Still Has a Way To Go

In a report published Friday, Morgan Stanley analyst Craig Hettenbach reiterated an Underweight rating on ON Semiconductor Corp. ONNN, and raised the price target from $6.50 to $7.00. In the report, Morgan Stanley noted, “The improvement in ON's business is encouraging, although [that] should not prove that surprising given the company's bullish tone earlier this year at CES. The SANYO business (now called SSG) was break-even in the quarter, representing an important milestone. That said, we expect only modest improvement in SSG profitability in absence of stronger revenue growth. At the same time, the company is reinstating variable comp for the core ON business, which will offset some of the opex savings expected in SSG. Net, net, while ON's business is showing initial signs of recovery, we remain Underweight relative to other names in our universe that have stronger growth prospects and/or operating leverage.” ON Semiconductor Corp. closed on Thursday at $8.32.