Analog Devices (ADI) is a semiconductor company that designs and manufactures a broad portfolio of solutions, including integrated circuits (ICs) software and subsystems.
Let’s take a look at the company’s financial performance and what has changed in its key risk factors.
Analog Devices Financial Performance
Let us dive into the company’s financial performance for the fiscal third quarter. The company delivered a healthy financial performance, driven by strength in all end markets, including the industrial and automotive segments.
This helped the company register a 21% year-over-year jump in revenue to $1.76 billion. The figure also surpassed the consensus estimate of $1.71 billion.
In other positive news, adjusted earnings increased 26% year-over-year to $1.72 a share, outpacing the consensus estimate of $1.62 a share.
CEO of Analog Devices Vincent Roche said, “The economic recovery continues to take shape with demand still far exceeding supply, underscoring the importance of semiconductors across all industries.” (See Analog Devices stock charts on TipRanks)
Analog Devices Risk Factors
According to the new Tipranks Risk Factors tool, Analog Devices’ main risk category is Finance & Corporate, which accounts for 35% of the total 31 risks identified.
Analog Devices has added one new risk factor since reporting its last full-year results.
The new risk factor is related to Analog Devices’ acquisition of Maxim (MXIM), which was disclosed in July last year.
Under the Finance & Corporate category, Analog Devices highlights that the company could incur significant costs as a result of the Maxim acquisition. Furthermore, ADI cautions investors that once the merger is completed, the combined company may have to incur additional costs related to Maxim’s integration.
The Finance & Corporate risk factor’s sector average is 39%, compared to Analog Devices’ 35%.
Wall Street’s Take on ADI
Following the fiscal third-quarter earnings release, Needham analyst Quinn Bolton reiterated a Buy rating on the stock and increased the price target to $200 from $195. This implies a 19.9% upside potential to current levels.
Bolton stated, “Management expects it will be able to close the Maxim deal no later than the three business days after receiving China’s approval. Management believes at closing the combined company will have approximately $4 billion in cash, a leverage ratio well below 1.0x, and more than $3 billion of annual free cash flow.”
On TipRanks, Analog Devices has a Strong Buy consensus rating based on 8 Buy ratings and 2 Hold ratings.
As for price targets, the average ADI price target is $190.56, reflecting 12-month upside potential of 14.3% from current levels.
Bottom Line
Analog Devices is up more than 42% over the past year, and its accelerating growth, led by 5G, automotive, and industrial, is intriguing to many analysts and investors.
Moreover, the TipRanks financial blogger opinions metric, which is based on 11 Blogger Opinions, indicates that 100% of analysts are bullish on ADI, compared to a sector average of 70%.
However, the new risk declared by the company could be a cause for concern for investors.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
