Skip to main content

Market Overview

Analyst: ON Semiconductor's Higher Long-Term Targets Are Achievable

Share:
Analyst: ON Semiconductor's Higher Long-Term Targets Are Achievable

ON Semiconductor Corp (NASDAQ: ON) announced higher 2022 targets at a Friday investor meeting. The targets, which reflect EPS of $3, FCF of $1.2 billion and revenue CAGR of 5 percent, seem reasonable against the backdrop of attractive industrial and automotive opportunities, according to Raymond James.

The Analyst

Raymond James’ Chris Caso maintains a Market Perform rating on ON Semiconductor.

The Thesis

Having achieved its 2020 targets two years early, the semiconductor giant set a new target of reaching revenue of $7.1 billion by 2022, Caso said in a Monday note. 

This implies a CAGR of around 5 percent, which is higher than ON's previous model of low-single digit growth through 2020, the analyst said. 

The higher targets are driven by the company’s two largest businesses, automotive and industrial automotive, Caso said. Automotive, which accounted for 31 percent of sales in 2018, is expected to have a 9-percent CAGR. Industrial automotive, which accounted for 26 percent of 2018 sales, is expected to have a 6-percent CAGR. 

The growth in these two businesses will be offset by the remaining 40 percent of the company’s business, which is projected to remain flat or down through 2022, the analyst said. 

The semiconductor maker's 2022 model incorporates a 22-percent operating margin on $7.1 billion in revenue, which yields $3 in EPS and $1.2 billion in FCF.

March will be a critical month for determining near-term trends, which the company has declined to discuss, according to Raymond James. 

Price Action

ON Semiconductor shares were up 2.49 percent at $22.69 at the time of publication Monday. 

Related Links:

MKM: Despite Near-Term Headwinds, ON Semiconductor's Long-Term Picture Remains Rosy

KeyBanc Starts Coverage On 10 Semiconductor Stocks, Downgrades Cypress Semi

Latest Ratings for ON

DateFirmActionFromTo
Feb 2021Truist SecuritiesMaintainsBuy
Feb 2021MizuhoMaintainsBuy
Feb 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for ON
View the Latest Analyst Ratings

 

Related Articles (ON)

View Comments and Join the Discussion!

Posted-In: Chris Caso Raymond James semiconductorsAnalyst Color Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
SIVBRaymond JamesReiterates600.0
PFCRaymond JamesMaintains37.0
RCLMorgan StanleyMaintains61.0
PNRMorgan StanleyMaintains69.0
HZORaymond JamesMaintains68.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com