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ON Semiconductor Hits 52-Week High on Solid Growth Drivers


Share price of ON Semiconductor Corp ON rallied to a new 52-week high of $12.22, eventually closing a tad bit lower at $12.04 on Sep 22. This represents a strong one-year return of approximately 30%, better than the S&P 500’s 11.3% over the same period.

Currently, ON Semi holds a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $5 billion.

Key Factors

ON Semi is an Original Equipment Manufacturer (OEM) of primarily analog semiconductors used in diverse end markets. The company reported strong second quarter results wherein both earnings and revenues exceeded the Zacks Consensus Estimate. Moreover, management provided strong revenue guidance for third-quarter 2016.

Most recently, the company completed its long pending acquisition of Fairchild Semiconductor International Inc. for $2.4 billion. Post completion ON Semi became a dominant name in the power semiconductor space. The deal will help the company diversify across many markets with a planned focus on smartphone, automotive and industrial end markets.

ON SEMICON CORP Price and Consensus

ON SEMICON CORP Price and Consensus | ON SEMICON CORP Quote

We believe that improving end markets, completion of the Fairchild acquisition, product breadth, diversification across end markets and geographies, and the benefits of restructuring actions are primary positives. However, leveraged balance sheet is a concern.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2016 has increased a penny to 85 cents over the last seven days as five out of 10 analysts revised their figures upward. Also, for fiscal 2017, it surged 12.6% to $1.16 per share over the same time frame, as six out of 10 analysts revised their estimates upwards.

Key Sector Picks

Better-ranked stocks in the sector include Analog Devices ADI, Silicon Laboratories SLAB and Inphi Corporation IPHI. You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices sports a Zacks #1 (Strong Buy) and estimates for both 2016 and 2017 have remained steady at $2.90 and $3.31, respectively over the last 7 days.

Similarly, 2016 and 2017 estimates for another Zacks Rank #1 stock – Silicon Laboratories – have remained steady at $1.59 and $1.74, respectively over the same time frame.

Inphi has a Zacks Rank #2 (Buy) and its estimates for 2016 and 2017 have remained steady at 75 cents and $1.17, respectively over the last 7 days.

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