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On Thursday, CFRA analysts increased the price target for Analog Devices (NASDAQ: ADI) stock, citing expectations of an order rebound. The new 12-month price target is set at $265, up from the previous $250, while the firm maintains a Buy rating on the shares. According to InvestingPro data, analyst targets range from $155 to $300, with 19 analysts recently revising their earnings estimates upward. The stock currently appears overvalued based on InvestingPro’s Fair Value analysis.
Analog Devices reported earnings per share (EPS) of $1.63 for the January quarter, surpassing the consensus estimate of $1.54. Despite this beat, sales saw a 4% decline, which was better than anticipated. The decrease in sales was attributed to drops in the industrials, automotive, and communications sectors, which were partially mitigated by a 19% increase in consumer segment revenue. InvestingPro analysis shows the company maintains strong profitability with a gross margin of 57.2% and healthy liquidity, with current assets exceeding short-term obligations by nearly 2x.
CFRA’s Angelo Zino adjusted the firm’s forecasts, reducing the Fiscal Year 2025 (ending in October) EPS estimate to $7.14 from $7.42 and the Fiscal Year 2026 estimate to $8.86 from $9.51. The price target adjustment reflects a price-to-earnings (P/E) ratio of 28.8 times CFRA’s calendar year 2026 EPS estimate of $9.20, which is above historical averages.
The report highlighted that Analog Devices is well-positioned for a sustained cyclical recovery due to improving bookings in the industrial and automotive markets, which comprise 74% of sales. The company also benefits from relatively short lead times of less than 7-8 weeks. However, operating margin has compressed by 150 basis points to 40.5% due to lower utilization and sales.
Despite challenging industry conditions, key financial metrics for Analog Devices remain robust. Operating cash flow was reported at 47% of sales, with a free cash flow (FCF) margin of 40%. Additionally, CFRA views the company’s 8% dividend increase and the announcement of a new $10 billion share buyback program positively. InvestingPro reveals the company has raised its dividend for 22 consecutive years, with a current yield of 1.78%. For deeper insights into ADI’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Analog Devices Inc (NASDAQ:ADI). reported its second-quarter financial results for 2025, surpassing both earnings and revenue estimates. The company achieved an earnings per share of $1.85, exceeding the forecasted $1.70, while revenue reached $2.64 billion, surpassing expectations of $2.51 billion. Despite these strong results, the company experienced a 3.77% drop in stock price in pre-market trading. The company’s industrial segment accounted for 44% of total revenue, marking a 17% year-over-year increase. Looking ahead, Analog Devices projects third-quarter revenue to be approximately $2.75 billion, with anticipated growth in the industrial segment. Analysts from firms such as Morgan Stanley (NYSE:MS) and Bank of America Securities noted the company’s strong performance in the automotive sector, though they expressed some concerns about potential impacts from tariffs. CEO Vincent Rhoef emphasized the company’s strategic foresight and adaptability, particularly in its focus on AI-driven intelligent edge solutions.
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