Shares of Analog Devices ( ADI 2.96% ) rose by up to 6% on Wednesday morning. The company, which produces high-performance analog and mixed-signal chips, reached its highest point at 10:20 a.m. ET before settling to a 2.2% increase later in the day. The stock surged after Analog Devices announced third-quarter results that exceeded analyst expectations and offered guidance for the upcoming quarter that met predictions. However, it fell back after company executives shared a cautious analysis of the market. earnings call .
Earnings for the third quarter slightly surpassed predictions.
Wall Street analysts had forecasted third-quarter adjusted earnings to be approximately $1.58 per share, with revenues around $2.27 billion. Although Analog Devices experienced a 25% decline in sales compared to the previous year, they still surpassed the average analyst expectations with $2.31 billion in sales. Earnings decreased by 37%, yet they still exceeded Wall Street’s projections at $1.58 per share.
For the fourth quarter, management has estimated their revenue to be approximately $2.4 billion, with expected earnings per share around $1.63. These figures are very close to what analysts are currently predicting.
The morning saw a brief increase in prices, but investors were not particularly swayed by CFO Rich Puccio’s analysis of the market. According to order bookings and the excess of component inventories in the automotive sector, sales in this industry are likely to remain sluggish through the first quarter of 2025.
The stock is being held back by the outlook for the auto industry.
The negative market response to Puccio’s remarks about the auto industry seems somewhat extreme. He talked about a temporary trend that would be succeeded by “rapid growth” in the latter part of 2025. Furthermore, the automotive sector continues to be a key client group with numerous opportunities for growth.
Puccio mentioned that they’ve observed increased success in capturing value across all kinds of vehicles, be it internal combustion engines, plug-in hybrid electric, or fully electric, particularly in the fastest-growing applications.
The company is dealing with economic challenges, yet its long-term outlook is still strong. Although Analog Devices’ stock isn’t inexpensive, as it is valued at 36 times its past earnings and 12 times its sales, it appears to be close to its record highs.
