On Semiconductor Falls 13% on $7B Synaptics Acquisition as TD Cowen Downgrades Both Stocks

On Semiconductor (ON) announced on Friday a $7 billion deal to acquire sensor maker Synaptics, aiming to tap the emerging physical artificial intelligence market. ON stock fell more than 13% premarket, on track for its biggest one-day decline in nearly 10 months, while SYNA rose 4%.

TD Cowen downgraded both companies to "Hold" from "Buy," citing that the deal "adds complexity to an already complicated model." The firm lowered ON's price target to $110 from $115. In contrast, Evercore ISI maintained an "Outperform" rating on ON and raised its price target to $137 from $121, citing $200 million in expected run-rate synergies. Synaptics received downgrades from Needham, Susquehanna, Rosenblatt, and Northland.