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On Saturday, Cantor Fitzgerald reiterated its Neutral rating on Analog Devices (NASDAQ:ADI) shares, maintaining a price target of $250.00. According to InvestingPro data, ADI currently trades at $210.47, with analyst targets ranging from $155 to $300, reflecting mixed sentiment on the stock’s valuation. The company, with a market capitalization of $104.45 billion, appears slightly overvalued based on InvestingPro’s Fair Value calculations. The firm’s analyst highlighted Analog Devices’ strong performance in the recent quarter, surpassing consensus estimates with April quarter revenues of $2.64 billion and earnings per share (EPS) of $1.85, compared to the expected $2.51 billion and $1.69 respectively. The company’s guidance for the July quarter was also raised to $2.75 billion in revenue and $1.92 in EPS, exceeding the consensus of $2.60 billion and $1.79.
Analog Devices’ success was attributed to a cyclical recovery in the Industrial sector, which saw growth across all sub-segments and geographies, particularly in Factory Automation and Broad-Based sub-segments. The company reported a book-to-bill ratio greater than 1.0, indicating a strong demand, and noted that inventory levels remain lean, with distribution inventory at six weeks. Management expressed confidence in the current cyclical upturn. InvestingPro data reveals the company’s strong financial position, with a current ratio of 2.08 and a 22-year track record of consecutive dividend increases, currently yielding 1.88%.
Despite these positive indicators, Cantor Fitzgerald pointed out some investor concerns, including some order pull-ins that boosted the April quarter results, though management indicated this would not benefit the July quarter. There was also a belief that demand in the Industrial sector would normalize post-July quarter recovery, although it is still 10-15% below the trend line. Additionally, a step-up in operating expenses due to variable compensation is expected to impact operating margin outlook into the July quarter, despite the forecast of returning to approximately 70% gross margins.
Cantor Fitzgerald’s estimates for Analog Devices remain largely unchanged, with a projection of $9.00 in EPS for the calendar year 2026, which is slightly below the consensus estimate of $9.22. The firm anticipates a 16% and 10% top-line growth for calendar years 2025 and 2026, respectively, and foresees cyclical growth extending into calendar year 2027, with a potential path to $10+ in EPS.
The price target of $250 reflects approximately 25 times the expected earnings into the 2026-2027 timeframe. In closing, Cantor Fitzgerald extended its best wishes to "young Mike" as he moves on to his next endeavor. For investors seeking deeper insights, InvestingPro offers comprehensive analysis with 13 additional ProTips and a detailed Pro Research Report, providing valuable metrics and expert analysis for informed investment decisions.
In other recent news, Analog Devices reported fiscal second-quarter 2025 results with revenue of $2.64 billion and earnings per share of $1.85, both exceeding Wall Street expectations. The automotive and communications segments contributed significantly to this performance, while consumer revenues also surpassed forecasts. Following these results, Benchmark adjusted its price target for Analog Devices to $260, maintaining a "Buy" rating, while Piper Sandler reduced its target to $215, citing concerns about automotive sector growth influenced by order pull-ins. TD Cowen took a more optimistic view, raising its price target to $250 and reiterating a "Buy" rating, highlighting the company’s strong inventory management and fab-lite business model. Truist Securities, however, lowered its price target to $219, maintaining a Hold rating due to uncertainties around tariffs and investor positioning. Despite the mixed analyst reactions, the general sentiment acknowledges Analog Devices’ strong quarterly performance and optimistic guidance. The company’s management remains confident in its cycle, particularly in the industrial sector, despite some cautionary notes regarding the automotive segment. Analysts have noted potential risks related to tariff impacts and order pull-ins, which may affect future performance.
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