Semiconductor company Analog Devices, Inc. (NASDAQ: ADI) has reported stronger-than-expected results for the second quarter ended April 30, 2022.
Despite the upbeat results, shares of the company declined 2.4% to close at $159.92 on Wednesday.
Revenue & Earnings
Analog Devices reported revenues of $2.97 billion at the end of the quarter, up 79% from the same quarter last year. Further, the figure topped the consensus estimate of $2.84 billion. The growth in revenues can be attributed to the 54% and 145% year-over-year rise witnessed in industrial and automotive revenues, respectively.
Earnings per share (EPS) in the quarter stood at $2.40, up 56% from the year-ago quarter. Further, the figure topped the consensus estimate of $2.10 per share.
Other Operating Metrics
The company’s core margins improved with the adjusted gross margin rising from 70.9% in the previous year to 74.2%. Further, its adjusted operating margin increased from 41.7% to 50.3%.
Meanwhile, the net cash provided by operating activities witnessed a rise of 65.9% from the year-ago quarter to $1.2 billion.
Outlook
For the third quarter, the company forecasts revenues of $3.05 billion. Further, it anticipates earnings of $1.55 per share.
Management’s Take
The CEO of Analog Devices, Vincent Roche, said, “ADI delivered its fifth consecutive quarter of record revenue, illustrating the unprecedented demand for our technologies and our ability to increase output in a challenging supply backdrop. Top line strength combined with successful synergy execution enabled adjusted gross margin, operating margin and EPS to achieve new highs.”
Stock Rating
Consensus among analysts is a Strong Buy based on seven Buys and two Holds. ADI’s average price target of $197.13 implies upside potential of 23.3% from current levels. Shares have gained 4.4% over the past year.
Conclusion
Despite the prevalent uncertainties plaguing the semiconductor industry, Analog Devices’ strong results and solid guidance make its growth prospects look attractive.
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