Cantor Fitzgerald has upgraded Analog Devices (ADI, Financial) to an Overweight rating, raising the price target from $250 to $270. The firm considers Analog Devices a standout in the analog sector, largely thanks to its significant industrial exposure. This positioning is deemed advantageous as the market enters an upswing, presenting an "attractive pair opportunity" for outperforming competitor Texas Instruments. Cantor underscores Analog Devices as a preferred choice for long-term investment within the industry, highlighting its suitability for the initial stages of economic recovery. The company's high-quality assets are seen as a crucial advantage in uncertain economic times. Additionally, the firm anticipates Analog Devices' continued strong performance will set it apart in the industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for Analog Devices Inc (ADI, Financial) is $242.64 with a high estimate of $285.00 and a low estimate of $155.00. The average target implies an upside of 6.30% from the current price of $228.25. More detailed estimate data can be found on the Analog Devices Inc (ADI) Forecast page.
Based on the consensus recommendation from 33 brokerage firms, Analog Devices Inc's (ADI, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Analog Devices Inc (ADI, Financial) in one year is $183.46, suggesting a downside of 19.62% from the current price of $228.25. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Analog Devices Inc (ADI) Summary page.
ADI Key Business Developments
Release Date: May 22, 2025
- Revenue: $2.64 billion, up 9% sequentially and 22% year over year.
- Industrial Revenue: 44% of total revenue, up 8% sequentially and 17% year over year.
- Automotive Revenue: 32% of total revenue, up 16% sequentially and 24% year over year.
- Communications Revenue: 12% of total revenue, up 5% sequentially and 32% year over year.
- Consumer Revenue: 12% of total revenue, flat sequentially and up 30% year over year.
- Gross Margin: 69.4%, up 60 basis points sequentially.
- Operating Margin: 41.2%.
- EPS: $1.85, up 32% year over year.
- Cash and Short-term Investments: $2.4 billion.
- Net Leverage Ratio: Decreased to 1.
- Inventory: Increased by $50 million sequentially.
- Operating Cash Flow: $3.9 billion over the trailing 12 months.
- CapEx: $0.6 billion over the trailing 12 months.
- Free Cash Flow: $3.3 billion or 34% of revenue over the trailing 12 months.
- Shareholder Returns: Nearly $2.5 billion returned through dividends and share repurchases over the trailing 12 months.
- Q3 Revenue Guidance: Expected to be $2.75 billion plus or minus $100 million.
- Q3 Operating Margin Guidance: Expected to be 41.5% plus or minus 100 basis points.
- Q3 EPS Guidance: Expected to be $1.92 plus or minus $0.10.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Analog Devices Inc (ADI, Financial) reported second quarter revenue of $2.64 billion, exceeding expectations with a 22% year-over-year increase.
- The company experienced double-digit year-over-year growth across all end markets, highlighting strong demand for its product portfolio.
- ADI's automotive segment saw a 16% sequential growth and 24% year-over-year increase, driven by strong demand for connectivity and power solutions, particularly in China.
- The industrial segment, representing 44% of revenue, showed an 8% sequential and 17% year-over-year growth, with broad recovery across subsectors.
- ADI's investments in expanding manufacturing capacity and deepening partnerships with foundries have enhanced supply chain resilience and customer supply optionality.
Negative Points
- The evolving tariff situation is impacting customer decision-making, creating some volatility in demand.
- Despite strong performance, the company noted that automotive results were partially aided by pull-in activity due to tariff announcements, which may not be sustainable.
- Operating expenses increased due to variable compensation, impacting operating margin growth.
- The company is cautious about the potential impact of tariffs on future demand, particularly in the automotive sector.
- Gross margin growth is expected to be minimal in the near term, with operating leverage being offset by annual salary increases and variable compensation growth.
