Bernstein Turns Bullish on Analog Devices After Q3 Beat

Key Moments

Bernstein Shifts to Outperform on Enhanced Risk-Reward

Bernstein upgraded Analog Devices (NASDAQ:ADI) to Outperform from Market Perform and raised its price target to $465 from $430, pointing to an improved risk-reward setup following a stronger-than-expected fiscal third-quarter performance and a robust outlook.

The firm highlighted that it had previously remained neutral on the stock primarily on valuation grounds, but now sees a more compelling alignment between the company’s growth trajectory and its current trading levels.

Q3 Results Exceed Expectations Across Key Segments

Analog Devices reported fiscal third-quarter revenue of $4.022 billion, surpassing Street expectations of $3.922 billion. Earnings per share came in at $3.45, above consensus forecasts of $3.35.

Bernstein noted that the upside was spread across the business, with particular outperformance in the automotive segment. The industrial, consumer, and communications divisions also delivered results ahead of expectations.

Gross margins were reported at 72.5%, matching forecasts, while operating expenses were lower than anticipated.

In U.S. premarket trading, shares of Analog Devices were up 1% following the release.

Q4 Guidance Signals Another Beat

Bernstein analyst Stacy Rasgon described the fourth-quarter outlook as “another significant beat,” with management guiding to $4.3 billion in revenue and $3.86 in earnings per share. This compares with Street estimates of $4.085 billion in revenue and $3.55 in EPS.

Rasgon said all operating segments were guided above consensus expectations. For the fourth quarter, industrial revenue is projected to grow at a high-single-digit percentage sequentially, automotive at low-single digits, communications at 10%, and consumer at high-single digits.