Market Overview

Citi Sees Analog Devices Shares As Fully Valued, Positive On Linear Acquisition


Analog Devices, Inc. (NASDAQ: ADI) has agreed to acquire Linear Technology Corporation (NASDAQ: LLTC) in a cash and stock transaction that values the latter at $14.8 billion. Citi’s Christopher Danely downgraded the rating on Analog Devices from Buy to Neutral, while raising the price target from $60 to $68.

Noting that the deal is expected to close in 1H17, analyst Christopher Danely commented, “We Love the Deal But Not a $68 ADI Stock.” He explained that Analog Devices’ stock appears fully valued even after including Linear’s contribution to EPS.

The price, at about $62 per share, represents a premium of 28 percent to Linear’s prior closing price. Analog Devices plans to fund the purchase with cash from its balance sheet, $7.3 billion in new debt, and the issuance of 58.0 million new shares, Danely mentioned.

Linear Is The Ferrari Of Analog

“Linear has the highest margins in semiconductors with gross margins of 76.2% and operating margins of 46.5% due to its expertise in high-end analog. We believe Linear’s products are complementary to ADI’s existing products as Linear specializes in a different area of analog than ADI,” the analyst wrote.

Danely estimated the deal to be EPS accretive by 23 percent or $0.76, given $150.0 million in synergies.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ADI

Oct 2019UpgradesSector WeightOverweight
Sep 2019UpgradesEqual-WeightOverweight
Aug 2019MaintainsEqual-Weight

View More Analyst Ratings for ADI
View the Latest Analyst Ratings

Posted-In: Christopher Danely CitiAnalyst Color Downgrades Price Target Analyst Ratings


Related Articles (LLTC + ADI)

View Comments and Join the Discussion!

Latest Ratings

WENMorgan StanleyMaintains22.0
XGNCantor FitzgeraldInitiates Coverage On18.0
LOOPRoth CapitalInitiates Coverage On14.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Sugar Futures Move Down

Citi: Twitter Showed No Meaningful Signs Of Improvement