ON Semiconductor rises on 1Q results and 2Q revenue forecast
NEW YORK—ON Semiconductor Corp. shares climbed Wednesday after the company posted first-quarter results that beat Wall Street expectations, and forecast strong second-quarter revenue growth.
The Phoenix-based company's adjusted profit was far larger than expected, and sales of $421.9 million were about $35 million above estimates. The company's forecast for the second quarter also was far stronger than anticipated: ON said it expects $545 million to $560 million in sales, while analysts expect $400.6 million, according to Thomson Financial.
The stock surged $1.59, or 20.4 percent, to $9.40.
Friedman Billings Ramsey analyst Craig Berger raised his price target to $14 per share from $11 on the news, and reiterated an "Outperform" rating on the stock. He said business trends improved in the first quarter, and ON's forecasts -- like those of many other chip makers -- proved conservative.
Berger said ON's buyout of rival AMIS Holdings Inc. will create large cost savings, and he added that the stock is "cheap."
Baird analyst Tristan Gerra said ON is doing well where competitors struggled, and starting in the third quarter, new contract wins and greater capacity at an efficient facility will increase revenue and margins.
Gerra maintained an "Outperform" rating on the stock, and raised his price target to $12 per share from $10.
Separately, credit ratings agency Moody's Investors Service upgraded ON's corporate family rating to 'Ba3' from 'B1' and senior secured debt ratings to 'Baa3' from 'Ba1.' The outlook is stable. The action concludes a review for possible upgrade that was initiated in December after ON said it would buy AMI Semiconductor for $915 million in stock.
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