On Thursday, Truist Securities maintained a Buy rating on Analog Devices (NASDAQ:ADI) and increased the price target to $275 from the previous $222 for the shares.
This adjustment follows the company's recent financial performance where it surpassed consensus for the first quarter ending in April and provided guidance for the second quarter ending in July that was above market expectations.
The company's recent financial report prompted Truist Securities to revise their outlook, marking the first upward revision for this cycle. According to the firm, Analog Devices has identified the first quarter bottom in its business cycle, which coincides with the stock reaching an all-time high.
The firm acknowledges that the stock is not considered "cheap" based on consensus estimates for the calendar year 2025, which anticipates a significant recovery.
Despite the high stock valuation, Truist Securities remains optimistic about the semiconductor industry, citing their industry-level cycle research that supports a positive stance. Analog Devices' effective business strategy is also a contributing factor to the firm's confidence in the company's future performance.
The analyst from Truist Securities noted the increase in the forecast for Analog Devices' calendar year 2025 earnings per share (EPS) to $8.60, up from the prior estimate of $8.39.
The new price target of $275 is based on a multiple of 32 times earnings, which reflects a 7 times historical discount compared to Analog's industry peers. The analyst's commentary underscores the firm's belief in the company's growth potential and their recommendation to buy shares.
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