NEW YORK (TheStreet) -- Analog Devices Inc. (ADI) was downgraded to "neutral" from "buy" at Citigroup (C) on Friday with the firm saying the downgrade was based on a valuation call and its expectations year-over-year revenue will flatten during the second half of 2014.
Citigroup also lowered its price target to $58 from $62 on the company, which designs, manufactures, and markets a variety of analog, mixed-signal and digital signal processing integrated circuits.
TheStreet Ratings team rates ANALOG DEVICES as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ANALOG DEVICES (ADI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ANALOG DEVICES has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, ANALOG DEVICES increased its bottom line by earning $2.14 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($2.28 versus $2.14).
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ADI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 9.68, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ANALOG DEVICES is rather high; currently it is at 69.48%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.28% is above that of the industry average.
- You can view the full analysis from the report here: ADI Ratings Report