On Wednesday, Stifel maintained a Buy rating on Analog Devices (NASDAQ:ADI) and increased the stock's price target to $265 from $240. The firm highlighted the company's solid financial performance, noting that Analog Devices' revenue and GAAP earnings per share, excluding charges, exceeded their estimates for the April quarter.
The midpoints for the July quarter guidance also surpassed expectations with a 7.0% revenue increase and an additional $0.12 in earnings per share compared to Stifel's forecasts.
The firm attributed the near-term growth outlook to two main factors: distribution sell-through and a broad-based recovery. Channel inventories are expected to decrease for the fifth consecutive quarter, despite a projected 5.1% quarter-over-quarter revenue growth. Moreover, bookings have increased quarter-over-quarter across all end markets, with the exception of Communications.
Stifel commended Analog Devices for its impressive trough profitability, which was evident in the second fiscal quarter of 2024. The company's non-GAAP operating margins stood at 39%, a significant improvement from the 28% in 2015 and the 15% in 2009. This performance underscores the effectiveness of Analog Devices' hybrid manufacturing model.
Analog Devices was also recognized as the industry's latest semiconductor titan, with a market capitalization of $107 billion. This valuation is approximately 80% of Intel (NASDAQ:INTC)'s, based on the intraday prices of $236.40 for Analog Devices and $31.74 for Intel on May 22, 2024. Stifel's new 12-month price target of $265 is based on 13.4 times the estimated enterprise value to sales for the calendar year 2025.
InvestingPro Insights
As Stifel maintains a bullish stance on Analog Devices with an increased price target, InvestingPro data further enriches the investment perspective. Analog Devices boasts a market capitalization of $117.17 billion, reflecting its stature as a semiconductor industry titan. The company trades at a high earnings multiple, with a current P/E ratio of 41.96 and a slightly adjusted P/E ratio for the last twelve months as of Q1 2024 at 39.41, indicating investor confidence in its future profitability despite a high valuation.
InvestingPro Tips highlight that Analog Devices has raised its dividend for 21 consecutive years, showcasing a commitment to returning value to shareholders. The dividend yield stands at 1.7%, with a notable dividend growth of 21.05% in the last twelve months as of Q1 2024. This consistency in dividend growth is a significant factor for income-focused investors.
Furthermore, the company is trading near its 52-week high, with a price 99.52% of the peak, signaling strong market sentiment. Over the past month, the stock has seen a robust return of 16.28%, aligning with the positive momentum recognized by Stifel.
For investors seeking a more comprehensive analysis, there are 17 additional InvestingPro Tips available that could provide deeper insights into Analog Devices' market position and financial health. Interested readers can access these insights and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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