Why ON Semiconductor (ONNN) Stock Is Up In Pre-market Trading

NEW YORK (TheStreet) -- Shares of ON Semiconductor Corp  (ONNN) are up 2.12% to $9.17 in pre-market trading after Sterne Agee reiterated a "buy" rating and a price target of $13.00 per share on the company. 

The firm is also raising its earnings estimates for fiscal 2014 to 88 cents per share from 87 cents per share, and boosting fiscal 2015 earnings estimates to $1.18 per share from $1.10 per share.

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In a research note, the firm cites ON Semiconductor's acquisition of Aptina Imaging for $400 million, which it announced after the close of trading, on Monday.  

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 some important positives, 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, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ONNN's revenue growth has slightly outpaced the industry average of 3.2%. 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.
  • 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 ($0.79 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.
  • 41.76% is the gross profit margin for ON SEMICONDUCTOR CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ONNN's net profit margin of 8.26% significantly trails the industry average.
  • You can view the full analysis from the report here: ONNN Ratings Report
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