The firm set a price target of $8 on the company's shares.
Analyst Michael Lucarelli does not believe the company's acquisitions have affected its bottom line positively and sees the continued practice of acquiring companies as a harmful strategy.
"From a strategy standpoint, we do not believe ON's acquisitive nature has been beneficial. It has failed to stimulate revenue growth, been margin destructive, diluted earnings, reduced focus on the core business, and taken away from S/H returns," said Lucarelli.
Separately, TheStreet Ratings team rates ON SEMICONDUCTOR CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ON SEMICONDUCTOR CORP (ONNN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ONNN's revenue growth has slightly outpaced the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ON SEMICONDUCTOR CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ON SEMICONDUCTOR CORP turned its bottom line around by earning $0.33 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.33).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 158.4% when compared to the same quarter one year prior, rising from $22.60 million to $58.40 million.
- You can view the full analysis from the report here: ONNN Ratings Report