IFNNY - ON Semiconductor Highlights The Importance Of Management And Margins

• ON Semiconductor posted a strong beat-and-raise quarter in line with its peers, but the bigger driver is management's initial commentary on the turnaround/improvement plan.
• El-Khoury's initial targets look like the right ones - emphasize value-added products, deprioritize more commodity-type products, and optimize the manufacturing footprint.
• A long-term adjusted FCF margin of 20% seems like a much more credible target now, but the share price already largely anticipates that.
• With opportunities to gain share, accelerate revenue growth, and expand margins, ON still has some appeal relative to other similarly-valued chip stocks.

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