The firm said it reduced its rating on the company, which designs, manufactures, and markets a variety of analog, mixed signal, and digital signal processing integrated circuits, as it feels Analog Devices will struggle to improve margins.
JPMorgan has a $60 price target on Analog Devices stock.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Separately, 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 revenue growth, expanding profit margins, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for ANALOG DEVICES is currently very high, coming in at 70.41%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.81% is above that of the industry average.
- ANALOG DEVICES's earnings per share improvement from the most recent quarter was slightly positive. 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 ($2.39 versus $2.14).
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ADI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.03 is high and demonstrates strong liquidity.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ANALOG DEVICES's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ADI Ratings Report