Shares of Analog Devices ADI hit a new 52-week high of $67.47 on May 22, eventually closing at $67.10. The company returned 33.3% in the past one year period and has gained approximately 21.7% year-to-date. Average volume of shares traded over the last three months was roughly 2,303K.
What is Driving Analog Devices?
Analog Devices is a leading supplier of analog and digital signal processing (DSP) integrated circuits. Its large customer base provides a competitive edge. We believe that the company is being driven by innovations in design technology and enjoys the advantages of a broad product portfolio.
The company gained momentum on strong fundamentals and better-than-expected second-quarter fiscal 2015 results reported on May 19. Since then, the stock has moved up 10%.
Analog Devices’ top line increased 6.4% sequentially and 18.2% year over year to $821.0 million. Also, revenues were toward the higher end of the guided range of $810–$830 million and beat the Zacks Consensus Estimate of $818.0 million. Non-GAAP earnings of 73 cents per share beat the Zacks Consensus Estimate by a penny. Strong operating performance primarily led to the year-over-year earnings growth.
For third-quarter 2015, Analog Devices projects revenues in the range of $825–$865 million. Earnings per share are expected within 71 cents to 77 cents. The relatively better bottom-line projection is an indication of continued momentum at the company.
Analog Devices’ strong execution, global market expansion, investments in new product development and strategic acquisitions will continue to drive growth. The company remains well positioned in the growing industrial and automotive markets. The company’s new products will continue to see strong deployment in the emerging automotive market, further expanding its share in the sensor market.
Additionally, the company delivered an average positive earnings surprise of nearly 1.13% over the trailing four quarters. Analog Devices’ strong revenue growth, solid financial base, increasing market share and strong long-term growth potential bode well.
Analog Devices currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some well-placed stocks in this space are Fairchild Semiconductor International Inc. FCS, MaxLinear, Inc. MXL and NXP Semiconductors NV NXPI. While Fairchild Semiconductor sports a Zacks Rank #1 (Strong Buy), MaxLinear and NXP Semiconductors carry a Zacks Rank #2 (Buy).
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