Analog Devices (NASDAQ:ADI) Upgraded by JPMorgan Chase & Co. to Overweight

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Analog Devices Inc. (NASDAQ: ADI) stock rose 0.70% (As on Sep 21, 11:31:38 AM UTC-4, Source: Google Finance) after JPMorgan upgraded the stock to Overweight from Neutral and boosted the target price on the chipmaker to $215 from $119. The consensus target is $190.48, and Friday’s closing print was $171.52. Based on the market for semiconductors, the expectations for revenue and earnings in the sector, and the analyst expects to see the consensus price target continue to edge higher and for Analog Devices to set a new all-time high before the end of the year.

For the fourth quarter of fiscal 2021, the company is forecasting revenue to be in the range of $1.78 billion, +/- $70 million. At the midpoint of this revenue outlook, the company expects reported operating margin of approximately 34.2%, +/-140 bps, and adjusted operating margin of approximately 43.7%, +/-100 bps. The company expects EPS to be $1.33, +/-$0.11, and adjusted EPS to be $1.72, +/-$0.11.

Moreover, for the third quarter of 2021, the total revenue was $1.76 billion, up 21% year-over-year. All markets increased sequentially with Industrial and Automotive once again achieving records. Gross margin had expanded to over 71% and operating margin to over 43% in the quarter. ADI delivered exceptional third quarter results, underpinned by the ability to increase production. Communications represented 16% of revenue and decreased 21% year-over-year while up 4% sequentially with growth in both wireless and wireline. Automotive represented 16% of revenue and increased 13% sequentially and 80% year-over-year. The strength in this sector was broad-based with double-digit growth across every major application. BMS and A2B remained the fastest-growing applications, and both are on track to nearly double in size this year. Consumer represented 10% of revenue and increased 16%, both sequentially and year-over-year

Meanwhile, Semiconductor maker Analog Devices Inc is buying rival Maxim Integrated Products Inc for about $21 billion in the largest U.S. deal this year, aimed at boosting its market share in automotive and 5G chipmaking. China’s State Administration for Market Regulation has recently given antitrust clearance for Analog Devices’ previously announced acquisition of Maxim. Analog Devices and Maxim anticipate that the transaction will close on or about August 26, 2021, subject to the satisfaction of the remaining customary closing conditions.

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