The recent slowdown impacting semiconductor company Analog Devices isn’t a concern for analysts at Baird Equity Research who noted that the company has historically navigated downturns well relative to its peers.
In a note to clients following the release of Analog Devices’ second quarter 2023 earnings, the analysts pointed out that the recent slowdown was driven by incremental China weakness, including in their EV market.
“While the slowdown is more exacerbated than we were expecting for ADI, we note the company tends to be relatively resilient in slowdowns notably from a gross margin standpoint,” they wrote. “Importantly pricing remains stable.”
On Analog Devices’ 2Q results for the period ending in April, the analysts wrote that pro forma earnings per share (EPS) including stock compensation was $2.83, which was near the high end of the guidance range of $2.65 to $2.85.
Revenue was also near the higher end of the guidance range of $3.1 to $3.3 billion at $3.26 billion, up 0.4% quarter-over-quarter.
However, they noted that the company’s guidance for the third quarter was below consensus estimates on both revenue and pro forma EPS.
“The $3.1 billion midpoint of F3Q23 revenue guidance is below the consensus estimate of $3.16 billion and our previous estimate of $3.38 billion,” they wrote.
“The midpoint of F3Q23 pro forma EPS guidance (including stock comp) of $2.42 to $2.62 is below consensus of $2.65 and our previous $2.93 estimate.”
The analysts reiterated their ‘Outperform’ rating and $235 price target on the stock. Analog Devices shares are currently trading at $172.54.
Contact the author at emily.jarvie@proactiveinvestors.com
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