UPDATE: Nomura Reiterates Neutral Rating, Raises PT on Analog Devices on FQ1 Earnings Review
In a report published Wednesday, Nomura reiterated its Neutral rating on Analog Devices (NASDAQ: ADI), and raised its price target from $35.00 to $40.00.
Nomura noted, “On the back of a weaker FQ1, ADI guides in line with a 5-year average and talks about stronger order patterns in Jan and Feb. We agree that Jan was the bottom, but shares appear to be pricing a strong recovery at 21x CY13E EPS. FQ1 (Jan) revenue of $622mn was slightly below the mid-point of guidance ($612-653mn). Gross margin of 62.7% was 70bps above guidance due to better product mix within the industrial market. Excluding one-time charges and R&D credit catch-up, EPS of $0.44 was in line with our estimate and a penny below consensus. The revenue miss was driven by communications (20% of sales), which declined 12% qoq versus the expectation of flat qoq. While FQ1 was weaker, FQ2 (Apr) revenue guidance of up 4-8% qoq is in line with a 5-year average of up 6% qoq. Gross margin is guided to improve to 64.0% in FQ2, which implies incremental gross margin of 85%. The improvement is driven by product mix.”
Analog Devices closed on Tuesday at $47.01.
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