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KeyBanc Upgrades ON Semiconductor To Buy As New CEO Joins

KeyBanc upgraded ON Semiconductor Corp.’s rating to Buy from Hold and maintained a price target of $37 (17.9% upside potential) on the stock, after the semiconductor company appointed Hassane El-Khoury as its new president and CEO effective from Dec. 7.

KeyBanc analyst John Vinh 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.” He added, “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.”

ON Semiconductor’s (ON) board chairman, Alan Campbell, said, “The focus of our search was to identify an experienced CEO who understands the transformation underway within our industry and to expand our leadership position in target secular growth markets, accelerate revenue, gross margin and earnings growth, and enhance stakeholder value.”

Last month, ON Semiconductor reported mixed 3Q results. Its earnings declined 18% to $0.27 per share but topped analysts’ estimates by $0.07 per share. Meanwhile, its revenues declined 5% year-over-year to $1.32 billion and were in line with the Street consensus. (See ON stock analysis on TipRanks)

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 12 Buys, 1 Hold and 1 Sell. The average price target stands at $31.69 and implies that the shares are almost fully priced at current levels. Shares have climbed 28.8% year-to-date.

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Amit Singh
Amit Singh jumped into the world of stock analysis and investing after completing his Post Graduate Diploma in Finance in 2009. Before joining TipRanks in 2020, he worked as an equity research analyst for eight years. With a keen eye for identifying strategic investment opportunities, his work entails evaluating stocks, building financial models, writing company-specific research reports, and identifying the overall financial worth of companies in the consumer staples and technology sectors. In 2017, Amit found a way to combine his expertise in evaluating companies with his passion for writing. He has also worked with the financial research firm Market Realist.