Analog Devices Earnings: The Firm Prepares to Brave a Turbulent Economy; Maintain Valuation

Wide-moat Analog Devices reported strong fiscal second-quarter results that came in ahead of our expectations but provided weaker-than-expected third-quarter guidance. Its business conditions appear to be reverting to pre-COVID-19 levels, rather than the booming environment of recent quarters amid the global chip shortage. We retain our confidence that Analog can weather any macroeconomic storms that lie ahead. As such, we maintain our $196 fair value estimate. For investors with a long-term perspective, we’re starting to see a rare, attractive margin of safety in shares of this high-quality chipmaker.