Stifel 'Cautious' On This Semiconductor Stock; UBS Initiates With Neutral Rating

Stifel analyst Tore Svanberg initiated coverage of ON Semiconductor Corp ON with a Hold rating and a $45 price target, implying a 5% upside.
The analyst supports its gross margin expansion strategy but finds it "difficult to ignore the unsustainable industry conditions," characterized by highly extended lead times and worsening supply chain conditions.
As such, Svanberg remains more cautious on ON shares, pending a view of a near-term lead-time correction.
UBS analyst Pradeep Ramani initiated coverage with a Neutral rating and a $46 price target, implying a 7% upside.
The company is well-positioned for growth given its Auto business, but its revenue growth may be back-end loaded amid restructuring, Ramani notes.
ON Semiconductor is a supplier of power and analog semiconductors, as well as sensors. It reported Q2 FY21 revenue growth of 38% year-on-year to $1.67 billion, beating the consensus of $1.62 billion. Non-GAAP EPS of $0.63 beat the consensus of $0.49.
Price Action: ON shares traded higher by 2.20% at $42.84 on the last check Thursday.