KeyBanc has raised its 12-month price target for Analog Devices Inc. to $430 from $375 while maintaining an Overweight rating, reflecting what the firm describes as resilient momentum in the business. The new target sits above current trading levels; ADI has been trading near its 52-week high of $355.36 and has returned 45.7% over the past year.
The uplift follows results that exceeded expectations for both the first quarter ended in January and the companys guidance for the April quarter. KeyBanc highlighted that the quarters upside was concentrated in Communications - with data center optical singled out - and in Consumer markets, including wearables and iPhone-related demand. InvestingPro analysis classifies Analog Devices overall financial health as "GOOD," reflecting the strength in those areas.
By contrast, the Industrial and Auto businesses were modestly weaker compared with the better-performing segments. Managements guidance points to second-quarter revenue growth of about 11% quarter-over-quarter, which notably exceeds the typical seasonal cadence of roughly 4% to 5% growth.
KeyBancs modeling attributes roughly one-third of that guided improvement to pricing. The firm also cited automated test equipment and data center end markets as continuing growth drivers, and described the companys position as benefiting from a broad cyclical recovery. At the same time, the company has not observed evidence of customer restocking, according to the information behind the upgrade.
Following Analog Devices fiscal announcements, several other brokerages adjusted their views. Needham upgraded the stock to Buy from Hold and set a $400 price target. Raymond James raised its target to $385 and maintained an Outperform rating, noting five consecutive quarters of consistent growth. Stifel boosted its target to $405 and pointed to long-term secular tailwinds across multiple end markets. Bernstein trimmed or adjusted its target to $375 while keeping a Market Perform rating and flagging the stocks high valuation.
In addition to analyst actions, the company announced an 11% increase in its quarterly dividend, raising the payout to $1.10 per share. That represents the 22nd consecutive year of dividend growth for the company.
KeyBanc said it raised both estimates and its price target on the basis of the stronger-than-expected results and guidance. The firm emphasized data center optical and automated test equipment as important contributors to near-term upside, while also noting that pricing has played a material role in the revenue improvement.
Bottom line: Analysts have responded to Analog Devices recent quarter and guidance with higher price targets and upgraded ratings in several cases, underpinned by strength in data center optical and consumer-facing products, an above-normal quarterly growth guide, and an 11% dividend hike.