Needham & Company Reiterates Buy Following ON Semiconductor's (ON) 3Q
Needham & Company maintained a Buy rating on ON Semiconductor (NASDAQ: ON), and cut the price target to $14.00 (from $17.00), following the company's 3Q earnings and 4Q outlook. Revenue of $904.2MM was slightly the Street's $906.8MM. NG EPS of $0.25 was in-line with consensus. Revenue guidance of $830-$870MM was ~4.7% below consensus forecasts but will likely be viewed as "better than feared" after commentary from ON's peers.
Analyst Rajvindra Gill commented, "We maintain our Buy on On Semi but lower our PT to $14 from $17 following a solid report but a lower 4Q outlook. Given the uncertain macro environment, specifically in China, and lackluster results from its peers, this report will be viewed as "better than feared", in our view. Despite a material slowdown in China, ON Semi is tied to several meaningful product cycles in the industry, namely: proliferation of image sensors in auto to support ADAS systems, wireless charging, and dollar content gains in PC computing. Even though 4Q outlook is lower than expectations, ON will grow sales 10% Y/Y in 2015 while the industry will be at best flat. With the stock trading at 10x P/E 2016E, and mgmt disinclined on OPEX controls in order to generate leverage, we maintain Buy and recommend accumulate shares on weakness."
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Shares of ON Semiconductor closed at $10.28 yesterday.