ON Stock On Track For Biggest One-Day Fall In 10 Months – TD Cowen Believes Its $7B Synaptics Deal ‘Adds Complexity To An Already Complicated Model’

The firm downgraded both companies to “Hold” from “Buy” and lowered its price target on On Semiconductor.

• The deal did not change Evercore ISI’s bullish position on On Semiconductor.
• Synaptics stock received downgrades from Needham, Susquehanna, Rosenblatt, and Northland.
• Koyfin data shows that Wall Street is more bullish on Synaptics and neutral on On Semiconductor.

Shares of On Semiconductor (ON) were down on Friday after the power chip maker said it had signed a $7 billion deal to acquire sensor maker Synaptics, in a bid to capitalize on the emerging physical artificial intelligence market.

Following the announcement, TD Cowen downgraded both companies. At the time of writing, ON stock was down more than 13% premarket, on track for its biggest one-day percentage decline in nearly 10 months, while SYNA stock was 4% higher.

Onsemi-Synaptics Merger: TD Cowen’s Take

The firm said it believes in the data center growth and capital return story of the merger transaction between the two. However, TD Cowen believes the deal "adds complexity to an already complicated model," per TheFly.

TD Cowen lowered its price target on ON to $110 from $115, implying a more than 7% downside potential from the stock’s last close on Thursday. It kept its price target on SYNA shares unchanged at $150. The firm lowered its rating on both stocks to “Hold” from “Buy.”

Other Takeaways On ON And SYNA

The deal did not change Evercore ISI’s bullish position on On Semiconductor. Analyst Mark Lipacis believes the deal will bolster Onsemi's power, sensing and control franchise into edge AI compute and physical AI. The firm also cheered the company’s expectation of $200 million in run-rate synergies and earnings-per-share accretion within 18 months.

Evercore maintained its “Outperform” rating on the stock and raised the price target to $137 from $121, implying an upside potential of more than 15% from Thursday’s close.

Synaptics, on the other hand, received downgrades from Needham, Susquehanna, Rosenblatt, and Northland.

What Do Retail Traders Think About ON And SYNA?

On Stocktwits, retail sentiment toward the ON stock turned ‘neutral’ from ‘bearish’ over the last 24 hours, while it remained ‘bearish’ on SYNA.

ON has more than doubled in value over the last 12 months, while SYNA has risen over 92%, outpacing the benchmark S&P index.

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