Market Overview

Bernstein: Buy Analog Devices Before The Street Catches On

Bernstein: Buy Analog Devices Before The Street Catches On

Analog Devices, Inc. (NASDAQ: ADI) has underperformed peers over the past year following its acquisition of Linear Technologies — which creates a favorable setup for investors, according to Bernstein.

The Analyst

Bernstein's Stacy Rasgon upgraded Analog Devices from Market-Perform to Outperform with a price target boosted from $90 to $105.

The Thesis

Analog Devices' stock is now trading at a 16.5x P/FE multiple, which is not only a discount to its peers, but around 3.5 turns lower than Analog Devices and Linear Technologies' combined historical average, Rasgon said in the upgrade note. This may not be justified, since Analog Devices' fundamentals appear better than many of its higher-valued peers, he said. 

Analog Devices boasts a superior long-term content increase story within the industrial segment, while the communication segment is bolstered by Linear Technologies' business, the analyst said. Consumer headwinds appear to be "well-understood and modeled in," while ongoing deleveraging will serve as an additional value driver and could result in a better-than-expected timeline for the resumption of stock buybacks, Rasgon said. 

Bottom line, Analog Devices has been a stock that the analyst said he "wouldn't talk you out of owning" since 2011. But now investors may want to consider buying before the "story becomes more apparent" to the rest of the Street, he said. 

Price Action

Shares of Analog Devices were trading higher by 3 pecent in Tuesday morning's trading session.

Related Links:

Can Semiconductors Get Their Groove Back In 2018? Here's Oppenheimer's Playbook

Najarian Brothers See Unusual Options Activity In Analog Devices And Procter & Gamble

Latest Ratings for ADI

Mar 2020KeyBancMaintainsOverweight
Mar 2020CitigroupMaintainsBuy
Mar 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for ADI
View the Latest Analyst Ratings


Related Articles (ADI)

View Comments and Join the Discussion!

Posted-In: Bernstein Linear Technologies Stacy RasgonAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

XPOJP MorganMaintains84.0
UPSJP MorganMaintains113.0
UNPJP MorganMaintains163.0
NSCJP MorganMaintains189.0
MCHPJP MorganMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
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.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
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