Skip to main content

Market Overview

Analysts Dissect ON Semiconductor's Acquisition Of Quantenna

Share:
Analysts Dissect ON Semiconductor's Acquisition Of Quantenna

ON Semiconductor Corp (NASDAQ: ON) reached an agreement to acquire Quantenna Communications Inc (NASDAQ: QTNA), a leader in Wi-Fi technologies. Here is a summary of some of the Street's initial reactions to the $1 billion acquisition.

The Analysts

Raymond James' Chris Caso maintains a Market Perform rating on ON with no price target.

KeyBanc Capital Markets' John Vinh maintains a Sector Weight rating on ON with a $19 fair value estimate.

Raymond James: Expanding Addressable Market

ON and Quantenna have minimal overlap so the combination of the two is expected to generate just $26 million in operating synergies that will be fully realized in the first year, Caso said in a research report. The deal will give ON access to an incremental $1.2 billion potential market within the Internet of Things (IoT).

Caso said ON expects the deal to better position the company to achieve its 2022 target of achieving $7.2 billion in revenue and a 22 percent operating margin. Each $50 million in revenue upside will also generate an extra 10 cents in non-GAAP earnings per share over the longer term.

KeyBanc: Gaining Wi-Fi Expertise

ON is likely interested in combining Quantenna's Wi-Fi capabilities to improve its own Industrial IoT portfolio, Vinh said in a research report. Specifically, Quantenna's expertise in Wi-Fi cloud would improve ON's capability in Bluetooth and Power. The combination will also create a $1.2 billion opportunity in IoT industrial by 2022 in addition to Quantenna's existing markets.

The merger is expected to be 7 cents per share accretive to ON's EPS from $2.15 to $2.22 per share in the calendar year 2020. ON's net income is expected to move higher from $903 million as a standalone entity to $933 million.

Price Action

Shares of Quantenna traded higher by 18 percent Thursday morning.

Related Links:

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

Semiconductor Winners, Losers In A Potential Sino-American Trade Deal

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 + QTNA)

View Comments and Join the Discussion!

Posted-In: Chris Caso John VinhAnalyst Color M&A News Top Stories Analyst Ratings Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
IRIXRoth CapitalMaintains9.0
AMRSRoth CapitalMaintains33.0
VORBarclaysInitiates Coverage On56.0
PNMCitigroupDowngrades
UBSFYCitigroupUpgrades
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