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Analog Devices Inc ADI

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Morningstar’s Analysis

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ADI Prospers From an Ongoing Recovery in Chip Demand; $137 FVE; Shares Overvalued

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

Analog Devices reported solid fiscal first-quarter results and provided investors with a forecast for the April quarter that was modestly ahead of our prior expectations. Similar to its peers, ADI prospered from a bounce-back in chip demand after pandemic-related shutdowns at many of its customers several months ago, but the company faces supply constraints in the months ahead as demand across a variety of sectors appears to be outpacing chip supply. We raise our fair value estimate for wide-moat ADI to $137 per share from $130, but shares still appear expensive to us today.

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Company Profile

Business Description

Analog Devices is a leading analog, mixed signal, and digital signal processing chipmaker. The firm has a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. The company serves tens of thousands of customers, and more than half of its chip sales are made to industrial and automotive end markets. Analog Devices' chips are also incorporated into wireless infrastructure equipment.

One Analog Way
Wilmington, MA, 01887
T +1 781 329-4700
Sector Technology
Industry Semiconductors
Most Recent Earnings Jan 31, 2021
Fiscal Year End Oct 31, 2021
Stock Type Cyclical
Employees 15,900