Wedbush Downgrades ON Semiconductor (ON) to Neutral

Wedbush downgraded ON Semiconductor (NASDAQ: ON) from Outperform to Neutral with a price target of $12.00 (from $16.00), saying they expect choppy waters ahead from uncertain macro.

Analyst Betsy Van Hees commented, "While we continue to believe that ON will benefit in 2016 from (1) revenue growth opportunities in Aptina, Auto, and Industrial, (2) sustained profitability in SSG, and (3) disciplined spending, we believe given the challenging macro environment that without dividend support and lower debt to capital ratio, relative to our universe, ON will not be able to outperform the group, particularly in the 2H. As a broadbased supplier, we are concerned even with Q3 at 80% to 85% booked that ON’s guidance doesn’t factor in any additional weakening of the macro. With Q3 being a very back-end-loaded quarter and the macro uncertain, we wouldn’t be surprised if there was another miss and reset to Street estimates. While the $748MM remaining on ON’s 4-yr. $1B stock buyback will likely provide a floor at this level, we don’t think ON can outperform the group until there is better visibility on end market demand, material GM improvement, and plans to pay a dividend."

The firm cut FY 2015 EPS from $0.95 to $0.86 and FY 2016 EPS from $1.15 to $0.90.

For an analyst ratings summary and ratings history on ON Semiconductor click here. For more ratings news on ON Semiconductor click here.

Shares of ON Semiconductor closed at $10.34 yesterday.

You May Also Be Interested In

• Jefferies Downgrades Calix (CALX) to Hold
• STRATEC SE (SBS:GR) (SRBZF) PT Lowered to EUR41 at Berenberg
• Goldman Sachs Upgrades The TJX Companies (TJX) to Buy, 'best-in-class operator'