Takeaways From ADI Management Meetings

JP Morgan has published a research report for Analog Devices ADI following meeting with management. In the report, JP Morgan writes "ADI's gross and operating margins reached new highs in F3Q10 due to the manufacturing consolidation, improved pricing discipline, higher revenue (via the upturn) and an improved product mix. We believe the company has a little more upside on margins via higher utilization rates, continued pricing discipline and mix, and should be more protected in the downturn. We also expect Analog Devices' margins to be better insulated during the upcoming downturn due to a better mix of higher-margin business and lower variable costs. We estimate that almost 20% of the company's operating costs are variable, up from around 10% during the previous downturn." JP Morgan maintains its Neutral rating and $25 price target. Analog Devices closed yesterday at $31.03.