Chipmaker Analog Devices Heralds Start Of Cyclical Recovery

Chipmaker Analog Devices Heralds Start Of Cyclical Recovery

Chip maker Analog devices (ADI) on Wednesday exceeded Wall Street targets for its fiscal second quarter and topped forecasts for the current period. ADI stock rose on the news.


The Wilmington, Mass.-based company earned $1.40 per share on revenue of $2.16 billion in the quarter ended May 4. Analysts polled by FactSet expected earnings of $1.26 per share on revenue of $2.11 billion. On a year-over-year basis, Analog Devices’ profits fell 51% while sales declined 34%.

Analog Devices’ second-quarter financial report marked its fourth consecutive quarter of declining sales and profits as it faces a cyclical slowdown in demand. Analysts predict the declines will continue for three more quarters.

For the current quarter, Analog Devices expects adjusted earnings of $1.50 per share on revenue of $2.27 billion. This is based on the midpoint of its orientations. Wall Street was modeling adjusted earnings of $1.34 per share on revenue of $2.16 billion in the fiscal third quarter.

ADI Stock Jumps After Second Quarter Report

In pre-marketing exchanges on the stock market today, ADI stock climbed 6.5% to 230.67. This puts the title in record territory. Its previous high in the regular session was 218.70, which it reached on Monday.

“ADI delivered second-quarter revenue above the midpoint of our outlook, despite continued macroeconomic and inventory challenges,” Chief Executive Officer Vincent Roche said in a statement. Press release.

He added: “We believe inventory rationalization across our broad customer base is stabilizing, paving the way for a return to sequential growth in the third quarter. This, coupled with improving new orders, gives us optimism that we are at the start of a cyclical recovery. »

Analog Devices manufactures semiconductors for radio frequencies, energy management and sensors. Its chips are used in the industrial, communications, automotive and consumer markets.

In the fiscal second quarter, industrial chip sales accounted for 47% of the company’s revenue. Automotive was the second largest segment with 30% of sales.

ADI stock ranks seventh out of 33 stocks in IBD’s semiconductor manufacturing industry group, according to Checking ITN stocks.

Follow Patrick Seitz on @IBD_PSeitz for more articles on consumer technology, software and semiconductor stocks.


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