In a report released yesterday, Gary Mobley from Wells Fargo maintained a Hold rating on Analog Devices (ADI – Research Report), with a price target of $185.00.
Gary Mobley has given his Hold rating due to a combination of factors surrounding Analog Devices. The company is expected to maintain its forecast for overcoming inventory-related challenges by the middle of FY24, potentially setting the stage for a second-half recovery. However, Mobley has adjusted near-term estimates to account for a potentially deeper revenue trough, suggesting some caution. The guidance for Q1 FY24 revenue reflects decreases across all segments, with anticipated gross margins slightly below company targets due to a mix of product sales and lower utilization rates, further justifying a cautious stance.
The anticipation of a second-half recovery in FY24 is a key focal point for investors, and the earnings report may provide incremental insights into this possibility. While current estimates and consensus point to a bottom in Q2 FY24 with modest sequential improvements, positive factors such as stabilized bookings and limited order cancellations could support a more optimistic outlook. Nevertheless, the overall expectation of a high teens percentage revenue decline in FY24, along with the potential for an accelerated inventory drain, suggests a balanced view, leading to the Hold rating.
ADI’s price has also changed slightly for the past six months – from $181.320 to $187.540, which is a 3.43% increase.
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Analog Devices (ADI) Company Description:
Massachusetts-based Analog Devices, Inc. is a multinational semiconductor company, which designs, develops, manufactures, and markets integrated circuits (ICs) that leverage analog, mixed-signal, and digital signal processing technologies. The company offers data converter products, power management and reference products and digital signal processing and system products. The company also serves clients in the industrial, automotive, consumer, and communications markets.
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