Analog Devices (NASDAQ:ADI) was raised to Buy from Hold at Edward Jones on Friday, with analysts saying the company is well-positioned to benefit from growing automation revenue.
"We expect the company to benefit from a greater proliferation of automated and connected devices across a wide array of end markets, leading to more chips in each device," analysts wrote.
The investment firm also believes that automobiles with enhanced features and a continued shift to greater electrification should drive increased chip content per vehicle.
"Beyond Analog's end markets, we believe its hybrid manufacturing model results in greater cash flow and less capital investment relative to peers, increasing overall financial flexibility," analysts added.
ADI trades at around 20 times Edward Jones' fiscal 2025 earnings estimate, in line with its average of 20. Analysts said they believe shares are attractively valued, acknowledging that it has underperformed technology stocks recently because demand for ADI's chips has started to slow, resulting in slower growth.