Littelfuse Buys Product Portfolio From ON Semiconductor, Could Be Solidly Accretive Long-Term

Baird have increased the price target on Littelfuse, Inc. LFUS shares from $128 to $132 and maintained an Outperform rating on the stock.

The revised price objective comes after the company indicated its intention to acquire a product portfolio from ON Semiconductor on August 25. The brokerage believes the move could be a solid earnings accretion of $0.30 on a long-term basis after the manufacturing is brought in-house. For the near-term, the analysts see modest EPS accretion.

For the next year, the brokerage pointed out the company's estimation that the acquisition would add approximately $0.05 or 1 percent to Littelfuse EPS while expecting the acquisition to be neutral in the current year.

Baird liked the risk/reward citing solid market demand and execution. The company's move to deploy capital also encouraged the analysts to keep upward bias on their estimates.

"We believe the product portfolio is a good strategic fit for LFUS, with the TVS diodes and switching thyristors complementing the company's existing product offering. Additionally, we believe the acquired portfolio strengthens LFUS' presence in the automotive electronics segment of the market," the analysts said in a note.

The brokerage expects 1GBT to be a fresh product type offering elevated exposure to tier one supplier. The analysts expect that some of the suppliers could be Littelfuse's current customers.

The stock advanced $0.98, or 1 percent, to $126.02.