Analog Devices Delivers Strong Q2 Results; Shares Pop 5%

Analog Devices (ADI) rose almost 5% on May 19 after the semiconductor company announced strong fiscal second-quarter results. Analog Devices specializes in data conversion, signal processing, and power management technology.

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Revenues of $1.66 billion surpassed the Street’s estimates of $1.61 billion and jumped 26% from the year-ago period. The increase was attributed to strength in the industrial and automotive markets.

Earnings came in at $1.54 per share, beating the consensus estimates of $1.45 per share and soared 43% year-over-year.

Analog Devices CEO Vincent Roche said, “The economic recovery has materialized faster and stronger than initially anticipated, increasing pressure across supply chains globally. Our decision to strategically invest in additional capacity ahead of this demand inflection has enabled us to move with speed and agility to better serve our customers. These investments combined with continued momentum in bookings give us confidence that our second half will be stronger than the first half.” (See Analog Devices stock analysis on TipRanks)

He further added, “I am more optimistic than ever about ADI’s position in this reordered world as we create long-term value for all stakeholders.”

For Q3, the company expects revenue in the range of $1.63 billion to $1.77 billion versus the consensus estimate of $1.65 million. Earnings per share are expected to land in the range of $1.50 – $1.72, versus consensus forecasts of $1.53.

Following the fiscal Q2 earnings release, Robert W. Baird analyst Tristan Gerra maintained a Buy rating and increased the price target to $165 (7.8% upside potential).

Gerra commented, “Analog Devices would have guided significantly higher than seasonal without the ongoing significant supply constraints, echoing constraints reflected in peers guidances including TI. Management expects lead times to remain stretched for a while, in line with our bullish thesis on the semiconductor industry, while bookings/backlog remain very strong, suggesting a C1H22 above-seasonal outlook.”

Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average analyst price target stands at $183.25 and implies upside potential of 19.7% to current levels. Shares have gained 33.7% over the past year.

TipRanks data shows that financial blogger opinions are 100% Bullish on ADI, compared to a sector average of 69%.