Vivek Arya, an analyst from Bank of America Securities, maintained the Buy rating on ON Semiconductor (ON – Research Report). The associated price target remains the same with $60.00.
Vivek Arya has given his Buy rating due to a combination of factors that highlight ON Semiconductor’s potential for growth and strategic advantage. The company’s proposal to acquire Allegro Microsystems is seen as a promising move, with the transaction offering a significant premium over previous offers and potentially enhancing ON’s portfolio with complementary automotive power and sensor assets. This acquisition could also improve ON’s product mix, as Allegro boasts a higher gross margin compared to ON.
Moreover, Arya’s analysis suggests that the acquisition could lead to earnings per share accretion by 2027, driven by cost reductions and ON’s strong financial position. The potential for ON’s larger sales force to expand Allegro’s market reach further supports the Buy rating. Additionally, ON’s historical success in integrating and managing acquisitions in the auto and industrial sectors adds confidence to the potential benefits of this deal. Despite potential regulatory hurdles, particularly in China, the strategic merits of the acquisition underpin Arya’s positive outlook on ON Semiconductor.
According to TipRanks, Arya is a 5-star analyst with an average return of 12.2% and a 52.12% success rate. Arya covers the Technology sector, focusing on stocks such as Nvidia, Broadcom, and Marvell.
In another report released yesterday, Wells Fargo also maintained a Buy rating on the stock with a $60.00 price target.