"We believe Analog Devices continues to be under-modeled for the second half of 2015 and 2016 with multiple company specific product drivers specifically emerging revenue synergies from its 2014 acquisition of Hittite (HITT), " analysts at Credit Suisse said.
Other product drivers include a bottoming of base-station building in C2Q (Core 2 Quad) as well as good leverage to continued build out of small cell or heterogeneous networks, Credit Suisse noted.
Additionally, the firm raised the price target of Analog Devices regarding the proliferation of force-touch applications across multiple product lines, including Apple's (AAPL) Watch, iPhone 6s and iPad.
Analog Devices, an electronic equipment company, is engaged in the design, manufacture and marketing of high-performance analog, mixed-signal and digital signal processing integrated circuits.
Shares of Analog Devices are down 0.18% to $66.14 in morning trading Monday.
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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 18.2%. 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 3.26, which clearly demonstrates the ability to cover short-term cash needs.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
- The gross profit margin for ANALOG DEVICES is currently very high, coming in at 70.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.01% is above that of the industry average.
- Net operating cash flow has increased to $344.03 million or 44.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.44%.
- You can view the full analysis from the report here: ADI Ratings Report