ON Semiconductor Analyst Roundup Following Q4 Earnings

ON Semiconductor Corp ONNN reported Q4 earnings results on Thursday and beat expectations.

The company reported EPS of $0.17 on revenue of $864 million and the stock rallied on Friday to close at $11.38, up 10.81 percent.

Analysts weighed in on the results. Below are highlights along with current ratings and price targets.

Wedbush - Outperform, $13 price target

“We believe the solid quarterly execution and better-than-expected revenue outlook is undeniable proof that the long-awaited wind has finally hit ONNN’s sails...we believe the company is well-positioned to benefit from (1) sustained profitability in SSG, (2) smooth integration and considerable synergies from Aptina, and (3) revenue growth above the overall semi industry in end markets like auto and industrial in 2015. We believe the next catalyst for ONNN will be its Analyst Day on Feb 26 in Scottsdale, AZ where we expect road map for GM expansion and new LT model.”

Morgan Stanley - Underweight, $11 price target

“While the earnings report was positive, near term operating leverage looks fairly muted, held back by GMs. ON is starting 2015 on a strong note in terms of bookings, similar to a year ago. Recall, last year early momentum faded by mid year, so the key will be if this sustains in Q2. We like the change in the company's capital allocation strategy that now leans more heavily on buybacks. However, we still have questions on the Aptina deal, especially the negative implications for GMs and ON's ability to seamlessly transition the product portfolio toward higher end applications and away from the more commodity segments of the market.”

FBR & Co. - Outperform, $12.50 price target

“We remain favorable on ONNN as a new, lower-cost structure is emerging, helping to drive operating leverage as revenue returns. Indeed, we believe ON's revenues are growing, particularly as the drag from Sanyo abates and the general semiconductor recovery marches on. To boot, we think ON should benefit from a better mix of higher-margin industrial and auto revenue, as well as the ramp of high-value products, such as image-stabilization sensors and high-resolution optical sensors. ONNN remains one of the least expensive stocks in our universe and should benefit from (modest) multiple expansion as its new cash return policy helps reduce share count dramatically over the next few years.”