Cantor Fitzgerald Reaffirms Overweight on Analog Devices, $550 PT

Cantor Fitzgerald analyst Matthew Prisco reiterated an Overweight rating and $550 price target on Analog Devices (NASDAQ: ADI).

“We expect ADI to post a very solid beat and raise (think Oct Q rev/EPS of $4.25B+/$3.75+ vs. cons of $4.07B/ $3.54), better than peers in terms of magnitude and vs. typical seasonality (with the Oct Q likely representing the 10th consecutive Q of above-seasonal growth for ADI).

Add in commentary that is likely to support continued cyclical strength, coupled with ongoing growth in AI-related revs (we estimate ~19% of revs last Q; expect ADI to talk up all 3 buckets here), and there is a lot to like about this print as numbers move higher. On the flip side, it’s been a challenging Analog earnings season, and peers have set a pretty consistent bar for 3Q growth of +6-8% vs.

ADI’s typical seasonality of +LSD% – so we may have to see a guide of +8% Q/Q or better to get investors excited (which is within the realm of possibilities and compares to our base case of +6%).

Elsewhere, we expect GMs to come in better-than-expected, which should be well-received (think guide 73%+), though the magnitude of upside is somewhat constrained as ADI already operates at best-in-class levels (so don’t expect a MCHP-like pop from this dynamic).

But overall, there is no change to our view for EPS upside to $18 in CY27 (vs. cons of $15.59 today).

And at a 25x multiple (which we view as a very fair mid-cycle multiple), this would result in fair value of $450.

We believe there is upside from both a multiple and EPS perspective as investors shift focus to CY28 where EPS upside is closer to $20 – supporting our price target of $550 at a 28x multiple.

We reiterate our Overweight rating.”

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