TD Cowen Raises Analog Devices Price Target to $450
TD Cowen analyst Joshua Buchalter raised the price target on Analog Devices (NASDAQ: ADI) to $450.00 (from $400.00) while maintaining a Buy rating.
“High-Quality Results And Guide Against A High Bar; The upcycle continues, with strong results in Ind./Comms supported by upside in Auto.
AI DCrelated revenues again grew considerably Q/Q, with Empower tuck-in deal to bolster lowvoltage power offerings.
Guided JulQ growth mirrors analog peers and GM% is back to 2023 levels.
We think the stock hangup reflects high expectations and concerns of peak GM%…at an impressive 73%. Buy, PT to $450.
Three Positives: 1) Industrial demand—across all subsegments—continues Q/Q and Y/Y growth trajectory after a +20% AprQ; considerably strong China auto demand exiting AprQ.
2) GM% at levels (73%) not seen since 2023’s peak revenues, and mix could provide further upside.
3) Datacenter business drove upside in Industrial/Comms, with the business operating at >$2.5B run-rate by our estimate (~$2B last Q).
Three Negatives: 1) Already improved utilization rates leave little room for volume-driven upside to GM% from here.
2) OpEx continues to grow to support investment in key areas, though we still expect significant earnings accretion.
3) Prolonged outperformance versus seasonal and peers may drive questions of sustainability.”
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