Morgan Stanley Sees Solid Quarter/Outlook For Analog Devices

In a report published Wednesday, Morgan Stanley analyst Craig Hettenbach reiterated an Equal-Weight rating on Analog Devices ADI. In the report, Morgan Stanley noted, “We view ADI's report positively relative to balanced investor expectations and we see ~8% upside to our base case of $56. Importantly, the company's broad-based industrial business increased 13% q/q and 5% y/y, with sequential growth a few hundred bp above expectations. Like ADI, we are positive on cap-ex trends in Industrial—MS estimates 7.9% y/y growth in 2014, up from 3.7% last year. "On the other hand, deferred income to distributors increased 9% q/q, although disti revenue growth is also improving and disti inventory was flat at 7.5 weeks. Finally, while the board is consistently raising the dividend, buyback activity is underwhelming at $23mn in the quarter and $150mn in the past year.” Analog Devices closed on Tuesday at $51.98.