ON - New Leadership Enhances ON Semiconductor's Self-Help Story

• ON Semiconductor hired former Cypress CEO Hassane El-Khouy as its next CEO, and El-Khuoy brings a track record of market-beating revenue growth and meaningful margin improvement at Cypress.
• ON's Q3 results highlight the ongoing need for margin improvement, as gross and operating margins remain well below those of many peers.
• Emerging markets like auto power and ADAS, industrial, computing, and communications power, and sensing offer ON opportunities to upgrade its product/margin mix, and outsourcing production remains an option.
• While ON looks fairly-valued on the basis of its likely near-term performance, more meaningful longer-term margin improvement can support a fair value in the mid-$30's today.

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