ON Semiconductor Good to Get On

ON Semiconductor (ONNN - Analyst Report) is an OEM [original equipment manufacturer] of primarily analog semiconductors used within a diverse set of end markets. June quarter results beat consensus estimates on the top and bottom-line. Next quarter's revenue guidance is for 1-4% growth. Backlog represents over 90% of next quarter's revenue projection.

The company has also begun to get significant revenue from its recent major purchase of LSI Logic's (LSI - Analyst Report) Gresham, Oregon wafer facility, which has the potential to be a solid revenue driver. The products produced at the Gresham facility are of the high-margin variety.

We feel the stock is undervalued at these levels, and recommend investors buy the shares. We feel the company can outgrow the industry. ONNN's considerable debt burden and the TPG sale are still major concerns that investors should consider when purchasing the stock, but we believe that the shares will trade above the current set of metrics, and consequently are setting a $13.00 price target with a corresponding 13.3x P/E.

Read the full analyst report on ONNN

Read the full analyst report on LSI