JPMorgan maintains ADI stock Overweight with $300 target

On Thursday, JPMorgan reiterated its Overweight rating and $300.00 price target for Analog Devices (NASDAQ:ADI), following the company’s report of strong April-quarter results. According to InvestingPro data, ADI is currently trading near its Fair Value, with 19 analysts recently revising their earnings estimates upward for the upcoming period. The stock’s analyst consensus remains bullish, with price targets ranging from $155 to $300. Analog Devices exceeded the mid-point of their projected ranges for revenue, operating profit margins, and earnings per share. This performance was attributed to a cyclical recovery and a demand pull-forward in their automotive sector, which saw a high-single-digit million increase.

The company experienced broad-based bookings strength across all end markets and geographies, with a quarter-over-quarter acceleration and a book-to-bill ratio greater than one. Notably, the industrial inventory correction has concluded, and Analog Devices plans to ship to end demand in the July quarter. The company’s financial health appears robust, with InvestingPro data showing liquid assets exceeding short-term obligations and a moderate debt level. ADI maintains an impressive track record of 22 consecutive years of dividend increases, demonstrating consistent financial strength. Revenue for the next quarter is guided to increase by 4% quarter-over-quarter, with industrial and consumer segments leading the growth, although automotive revenue is expected to decline due to the previous quarter’s demand pull-forward.

Analog Devices has identified several growth drivers, including AI-related markets projected to reach $400 million in FY24 and potentially grow 20-25% year-over-year in FY25. As a prominent player in the Semiconductors & Semiconductor Equipment industry, ADI boasts strong financial metrics with a gross profit margin of 57.16% and healthy cash flow generation. For deeper insights into ADI’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks. Additionally, strength in aerospace and defense is anticipated to generate $1 billion in annualized revenues for the July quarter. The company noted an increase in automotive sell-through and orders in the Americas and Europe, up 20% quarter-over-quarter, after the announcement of a 25% auto tariff. This trend suggests a demand pull-forward, which may affect second-half seasonal trends.

Gross margins are forecasted to rise to 70% in the July quarter, with potential for a 100-200 basis points improvement as cyclical conditions get better and utilization rates increase. However, operating expenses are also climbing due to variable costs related to compensation and funding growth initiatives, which is temporarily dampening the operating leverage of the business model, affecting earnings upside despite robust revenue performance.

JPMorgan anticipates a weaker macro demand environment and below-seasonal trends in the second half of the year. As a result, the firm has adjusted its CY25 estimates downward and initiated CY26 estimates. Despite these adjustments, JPMorgan remains confident in Analog Devices, reaffirming its Overweight rating and maintaining the company as their top pick in the broad-based diversified semiconductor market segment. The company’s resilience is reflected in its strong financial metrics, with InvestingPro showing impressive five-year returns and a beta of 0.98, indicating relatively stable stock performance compared to the market.

In other recent news, Analog Devices reported strong financial results for the second quarter of 2025, exceeding both earnings and revenue forecasts. The company achieved an earnings per share (EPS) of $1.85, surpassing the expected $1.70, and reported revenue of $2.64 billion, which was higher than the anticipated $2.51 billion. Despite these positive results, the stock experienced a decline in pre-market trading. CFRA analysts raised their price target for Analog Devices to $265, citing an expected order rebound, while Wolfe Research adjusted its price target down to $280 but maintained an Outperform rating. CFRA also noted that Analog Devices is well-positioned for a cyclical recovery, particularly in the industrial and automotive markets, which make up a significant portion of its sales. Wolfe Research expressed optimism about the company’s future growth, suggesting that higher earnings power is necessary for sustainable stock price increases. Additionally, Analog Devices announced a new $10 billion share buyback program and an 8% dividend increase, reflecting robust financial metrics despite challenging industry conditions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.