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On Tuesday, Evercore ISI set a new price target for Analog Devices (NASDAQ:ADI) stock, raising it significantly to $280 from the previous target of $231. The firm maintained its Outperform rating on the shares, signaling confidence in the company’s performance. Currently trading at $210.47, ADI has a market capitalization of $104.45 billion and trades at a P/E ratio of 60.39, suggesting a premium valuation. According to InvestingPro data, the stock is currently fairly valued based on its proprietary Fair Value model. The revision follows a period of strong revenue reports from Analog Devices, with the most recent figures surpassing the high end of the company’s guidance.
Evercore ISI’s assessment is based on the expectation of Analog Devices experiencing a cyclical upturn, with the possibility of multiple quarters of upward revisions to financial forecasts. This optimism is supported by InvestingPro data showing that 22 analysts have recently revised their earnings estimates upward for the upcoming period. The firm draws parallels to similar patterns observed in previous years, such as 2003, 2010, and 2021, when Analog Devices consistently reported revenues at or above the high end of their guided ranges. With revenue of $9.82 billion in the last twelve months and strong financial health scores from InvestingPro, the company appears well-positioned for growth.
The positive outlook is partly attributed to a decline in inventories held by Electronics Manufacturing Services (EMS) and distributors, a trend that has been observed over the past five to nine quarters. Additionally, inventories are currently below the trendline, and Analog Devices has been shipping quantities below actual consumption rates, which Evercore ISI views as indicators of potential revenue growth.
Looking ahead, Evercore ISI’s revenue estimate for Analog Devices in 2026 stands at 13% above the consensus, suggesting a conservative stance that may be adjusted upward in the future. The price target of $280 is based on a 24x multiple of the firm’s projected 2027 earnings per share (EPS) of $12.66, which has been discounted back to present value.
The reaffirmed Outperform rating and increased price target reflect Evercore ISI’s anticipation of a sustained period of financial strength for Analog Devices, as the company appears to be on a trajectory of growth and upward revisions that began earlier this year. The company has demonstrated its commitment to shareholder returns by raising its dividend for 22 consecutive years, currently offering a yield of 1.88%. For deeper insights into ADI’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Analog Devices reported strong financial results for the April quarter, with revenues reaching $2.64 billion and earnings per share (EPS) of $1.85, surpassing consensus estimates of $2.51 billion in revenue and $1.69 EPS. The company also raised its guidance for the July quarter to $2.75 billion in revenue and $1.92 EPS, exceeding expectations. Analysts from Cantor Fitzgerald and Bernstein noted the company’s performance, with Cantor maintaining a Neutral rating and a price target of $250, while Bernstein kept a Market Perform rating with a $220 target. Benchmark, however, adjusted its price target to $260 from $275, maintaining a Buy rating, while Piper Sandler lowered its target to $215, citing concerns about order pull-ins in the automotive sector.
TD Cowen, on the other hand, raised its price target to $250, reiterating a Buy rating, and highlighted Analog Devices’ transparency and strong position amid industry uncertainties. The company’s industrial and automotive segments showed significant growth, although analysts pointed out potential risks associated with early order fulfillment and tariffs. Despite these concerns, Analog Devices’ management expressed confidence in the cyclical recovery and maintained a strong book-to-bill ratio, indicating robust demand. The firm’s outlook for the future remains cautiously optimistic, with expectations of continued growth in the semiconductor sector.
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