KeyBanc Makes Bull Case For ON Semiconductors As New CEO Takes Over

Hassane El-Khoury has assumed office as ON Semiconductor Corp’s ON next CEO, and his experience makes him well-suited to lead the company, according to KeyBanc Capital Markets.

The ON Semiconductor Analyst: John Vinh upgraded ON Semiconductor from Sector Weight to Overweight with an unchanged $37 price target. 

The ON Semiconductor Thesis: The company is well-positioned to benefit from a broader macro recovery and due to its exposure to secular growth in auto, industrials, 5G infra and cloud, Vinh said in the upgrade note.

“Additionally, on the cost side, the Company has already taken steps to rationalize its manufacturing footprint, having announced the shutdown/divestiture of three fabs (Rochester, Niigata, and Belgium), which is expected to save $75M in aggregate,” the analyst said. 

“Mr. El-Khoury could be the tipping point that could further accelerate efforts to rationalize manufacturing to a fab-lite model to drive further margin expansion.”

These initiatives should drive ON Semiconductor’s stock multiple and close the valuation gap versus peers, according to KeyBanc. 

ON Price Action: Shares of ON Semiconductor had risen by 3.94% to $31.78 in premarket trading on Tuesday.

New ON Semiconductor CEO Hassane El-Khoury. Courtesy photo.