Shares of semiconductor company Analog Devices, Inc. (ADI) have spiked 25.8% over the past 12 months. ADI recently delivered a better-than-expected performance for the fourth quarter on both top-line and bottom-line fronts. Revenue rose an impressive 53% year-over-year during the quarter driven by strong Industrial and Automotive markets, and Consumer business.
Additionally, ADI’s first-quarter guidance came in ahead of expectations. With these developments in mind, let us take a look at the changes in ADI’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, ADI’s top risk category is Finance & Corporate, contributing 30% to the total 27 risks identified. In its recent annual report, the company has added two and removed five key risk factors.
ADI recently completed the acquisition of Maxim. Under Finance & Corporate risk category ADI, highlighted that it will incur significant expenses associated with the integration of Maxim.
ADI has already incurred and expects to incur a number of non-recurring costs related to combining the operations of the two companies. Meanwhile, ADI expects to eliminate duplicate costs, strategic benefits, additional income, and other efficiencies resulting from the integration of Maxim.
The integration may offset incremental transaction, merger-related costs, and restructuring costs over time. However, the risk remains that any net benefits may not be ultimately achieved in the short-term or at all. (See Insiders’ Hot Stocks on TipRanks)
Under the Macro & Political risk category, ADI noted that its results of operations could see an impact from natural disasters in the locations of its operations. ADI relies on supplies, services, internal manufacturing capacity, wafer fabrication foundries, and other subcontractors across the globe. This makes it susceptible to natural disasters in any of these locations, which could lead to business disruption.
Further, ADI’s insurance may not be sufficient to cover losses stemming from such disruptions. The company noted that the long-term impact of climate change on the global economy and the semiconductor industry remains unclear but could be severe.
Compared to a sector average of 9%, ADI’s Macro & Political risk factor is at 15%.
Wall Street’s Take
Consensus on the Street is a Strong Buy based on 14 Buys and 3 Holds for the stock. The average Analog Devices price target of $208.71 implies a potential upside of 15.4% for the stock.
Related News:
Trane Reveals Intent to Raise Common Stock Dividend by 14%
Fortive to Acquire Provation Software for $1.43B
Vuzix Inks Distribution Agreement with Barcotec GmbH
