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On Monday, Truist Securities revised its price target for Analog Devices stock (NASDAQ: NASDAQ:ADI) to $219 from the previous target of $248, while maintaining a Hold rating on the shares. The adjustment follows the company’s report of strong first-quarter results and a positive second-quarter guidance. According to InvestingPro data, analyst targets for ADI range from $155 to $300, with 22 analysts recently revising their earnings estimates upward for the upcoming period. Despite these results, Truist’s analyst cites concerns that have led to a more cautious stance on the stock.
Analog Devices reported robust performance for the first quarter and provided an optimistic outlook for the second quarter. The management maintained a confident "cycle on!" perspective, particularly within the industrial sector. The company maintains strong financials with a gross profit margin of 58.76% and healthy liquidity, as indicated by its current ratio of 2.08. InvestingPro analysis shows the company’s overall financial health score as FAIR, with particularly strong ratings in profit and cash flow metrics. However, Truist analysts have identified several factors contributing to a less favorable view of the stock’s near-term prospects.
The sell-off in Analog Devices shares is attributed to a combination of investor positioning, potential tariff impacts, and unclear messaging regarding full-year growth expectations. Investors were reportedly long on the stock going into the quarter, which Truist suggests was a challenging setup. Additionally, the company’s commentary on automotive sector pull-ins has highlighted concerns about the negative effects of tariffs in the coming quarters. Confusion around the messaging for anticipated fourth-quarter targets also contributed to the cautious outlook.
Truist has also revised its earnings per share (EPS) forecast for the calendar year 2026 to $8.77, down from the previous estimate of $8.87. The new price target of $219 is based on a 25 times multiple, which reflects a five times historical discount to Analog’s recently lowered peer group. The Hold rating suggests that while the firm acknowledges the company’s strong performance, valuation and tariff concerns are reasons for maintaining a neutral position on the stock. Trading at a P/E ratio of 60.39, ADI currently appears overvalued according to InvestingPro Fair Value calculations. Despite valuation concerns, the company has maintained dividend payments for 23 consecutive years, with a current dividend yield of 1.88%.
In other recent news, Analog Devices reported strong financial results for the second quarter of 2025, surpassing earnings and revenue forecasts. The company achieved earnings per share (EPS) of $1.85, exceeding the forecasted $1.70, and reported revenue of $2.64 billion, which was higher than the expected $2.51 billion. Despite these positive results, UBS analyst Timothy Arcuri adjusted the price target for Analog Devices, reducing it from $295 to $285 while maintaining a Buy rating. Similarly, Wolfe Research lowered its price target to $280 from $295, yet kept an Outperform rating, reflecting a valuation based on expected earnings.
JPMorgan, on the other hand, maintained its Overweight rating and a $300 price target, attributing the strong April-quarter results to a cyclical recovery and demand pull-forward in the automotive sector. CFRA increased its price target to $265 from $250, noting an order rebound and a strong position for a sustained cyclical recovery. The firm highlighted a 19% increase in consumer segment revenue despite a 4% decline in overall sales.
Analog Devices’ forward guidance suggests continued revenue growth, particularly in the industrial segment, although the company anticipates a potential downturn in the automotive sector in the latter half of the year. Analysts expressed confidence in the company’s strategic positioning in rapidly growing markets such as electric vehicles and AI-driven computing, despite potential risks from tariffs and global economic uncertainties.
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