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Analog Devices Up 10.3% YTD: Should You Hold or Fold the Stock?
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Analog Devices (ADI - Free Report) has moved up 10.3% in the year-to-date period compared with the industry’s return of 3.9%.
ADI is benefiting from its portfolio strength and strategic partnerships, which are driving its momentum across various end-markets like industrial, automotive, consumer and communications.
Its efforts to integrate AI technology into products to deliver enhanced customer experience are a plus.
Expanding Partnerships Drives ADI Stock’s Prospects
Analog Devices recently announced a strategic partnership with Flagship Pioneering to speed up the development of a fully digitized biological world. Per the terms, ADI’s engineering capability in analog and digital semiconductors will be combined with Flagship’s applied biology knowledge. This is expected to promote innovation in biological insights, measurements, diagnostics and interventions for human health and sustainability.
ADI’s partnership with BMW Group to implement E²B, ADI's 10BASE-T1S Ethernet to the Edge bus technology, for early adoption in the automotive industry, is another positive. This technology supports software-defined vehicles and zonal architectures in automotive design.
Analog Devices teamed up with Taiwan Semiconductor (TSM - Free Report) to secure long-term wafer capacity via Japan Advanced Semiconductor Manufacturing, Inc. (JASM). This partnership will ensure a stable chip supply and focus on 40nm and finer technologies, facilitating rapid scaling and increased output to meet customer needs.
ADI recently joined forces with SambaNova Systems to use the latter’s SambaNova Suite for accelerating field sales and customer enablement. This generative AI platform will enhance data access, guide field recommendations and improve customer relationships. It also provides advanced open-source models, fine-tuning options, and perpetual model ownership.
Analog Devices and Honeywell (HON - Free Report) partnered to digitize commercial spaces without replacing existing wiring, reducing costs and downtime. ADI's single-pair Ethernet and software-configurable solutions simplify product design, enabling Honeywell to offer versatile, future-proof systems that streamline installation, lower inventory needs and facilitate easier upgrades.
Stiff Competition Hurts ADI Stock’s Prospects
However, the company faces tough competition from industry players like Texas Instruments (TXN - Free Report) , which is also making concerted efforts to integrate generative AI capabilities into its products.
On a year-to-date basis, ADI has underperformed TXN, which gained 20.7%. Texas Instruments’ growing investments in new growth avenues, strong portfolio and advanced technology infusion are driving its prospects.
It launched the DLPC8445 display controller — a new, compact solution for 4K UHD projectors. It enables ultra-small, high-performance projectors for gaming and AR glasses, delivering sub-millisecond latency and frame rates up to 240Hz.
The company also launched new semiconductors, including the AWR2544 77GHz radar sensor chip and the software-programmable DRV3946-Q1 and DRV3901-Q1 driver chips. These innovations enhance automotive safety and intelligence by improving sensor fusion and decision-making in advanced driver assistance systems (ADAS).
Conclusion
ADI has a Value Score of D that reflects stretched valuation at the current level.
Stiff competition, market volatility, macro headwinds, geo-political tensions and broad-based inventory corrections are making Analog Devices’ near-term prospects foggy. For fourth-quarter fiscal 2024, ADI expects revenues of $2.40 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.41 billion, indicating a fall of 11.4% year over year.
The company expects non-GAAP earnings to be $1.63 (+/- $0.10) per share. The consensus mark for the same is pegged at $1.63 per share, suggesting a decline of 18.9% year over year. The earnings estimate has moved 1.9% north in the past 30 days.
Investors remain optimistic about Analog Devices’ strong positioning in high-performance analog (HPA) space, AI integrations and strong strategic partnerships.
Given the combination of risks and rewards, it would be wise for existing shareholders to hold on to their Analog Devices shares.
For new investors looking to buy the stock, it might be prudent to wait for a more attractive entry point.
Image: Bigstock
Analog Devices Up 10.3% YTD: Should You Hold or Fold the Stock?
Analog Devices (ADI - Free Report) has moved up 10.3% in the year-to-date period compared with the industry’s return of 3.9%.
ADI is benefiting from its portfolio strength and strategic partnerships, which are driving its momentum across various end-markets like industrial, automotive, consumer and communications.
Its efforts to integrate AI technology into products to deliver enhanced customer experience are a plus.
Analog Devices, Inc. Price and Consensus
Analog Devices, Inc. price-consensus-chart | Analog Devices, Inc. Quote
Expanding Partnerships Drives ADI Stock’s Prospects
Analog Devices recently announced a strategic partnership with Flagship Pioneering to speed up the development of a fully digitized biological world. Per the terms, ADI’s engineering capability in analog and digital semiconductors will be combined with Flagship’s applied biology knowledge. This is expected to promote innovation in biological insights, measurements, diagnostics and interventions for human health and sustainability.
ADI’s partnership with BMW Group to implement E²B, ADI's 10BASE-T1S Ethernet to the Edge bus technology, for early adoption in the automotive industry, is another positive. This technology supports software-defined vehicles and zonal architectures in automotive design.
Analog Devices teamed up with Taiwan Semiconductor (TSM - Free Report) to secure long-term wafer capacity via Japan Advanced Semiconductor Manufacturing, Inc. (JASM). This partnership will ensure a stable chip supply and focus on 40nm and finer technologies, facilitating rapid scaling and increased output to meet customer needs.
ADI recently joined forces with SambaNova Systems to use the latter’s SambaNova Suite for accelerating field sales and customer enablement. This generative AI platform will enhance data access, guide field recommendations and improve customer relationships. It also provides advanced open-source models, fine-tuning options, and perpetual model ownership.
Analog Devices and Honeywell (HON - Free Report) partnered to digitize commercial spaces without replacing existing wiring, reducing costs and downtime. ADI's single-pair Ethernet and software-configurable solutions simplify product design, enabling Honeywell to offer versatile, future-proof systems that streamline installation, lower inventory needs and facilitate easier upgrades.
Stiff Competition Hurts ADI Stock’s Prospects
However, the company faces tough competition from industry players like Texas Instruments (TXN - Free Report) , which is also making concerted efforts to integrate generative AI capabilities into its products.
On a year-to-date basis, ADI has underperformed TXN, which gained 20.7%.
Texas Instruments’ growing investments in new growth avenues, strong portfolio and advanced technology infusion are driving its prospects.
It launched the DLPC8445 display controller — a new, compact solution for 4K UHD projectors. It enables ultra-small, high-performance projectors for gaming and AR glasses, delivering sub-millisecond latency and frame rates up to 240Hz.
The company also launched new semiconductors, including the AWR2544 77GHz radar sensor chip and the software-programmable DRV3946-Q1 and DRV3901-Q1 driver chips. These innovations enhance automotive safety and intelligence by improving sensor fusion and decision-making in advanced driver assistance systems (ADAS).
Conclusion
ADI has a Value Score of D that reflects stretched valuation at the current level.
Stiff competition, market volatility, macro headwinds, geo-political tensions and broad-based inventory corrections are making Analog Devices’ near-term prospects foggy. For fourth-quarter fiscal 2024, ADI expects revenues of $2.40 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.41 billion, indicating a fall of 11.4% year over year.
The company expects non-GAAP earnings to be $1.63 (+/- $0.10) per share. The consensus mark for the same is pegged at $1.63 per share, suggesting a decline of 18.9% year over year. The earnings estimate has moved 1.9% north in the past 30 days.
Investors remain optimistic about Analog Devices’ strong positioning in high-performance analog (HPA) space, AI integrations and strong strategic partnerships.
Given the combination of risks and rewards, it would be wise for existing shareholders to hold on to their Analog Devices shares.
For new investors looking to buy the stock, it might be prudent to wait for a more attractive entry point.
Analog Devices currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.