Earnings Preview: Analog Devices - Analyst Blog
20 August 2012 - 4:30PM
Zacks
Analog Devices,
Inc. (ADI) is scheduled to announce its fiscal
third-quarter 2012 results on August 21. We have seen downward
movements in analyst estimates in the build-up to the release.
Prior-Quarter Synopsis
Analog Devices' second quarter 2012 pro forma earnings beat
the Zacks Consensus Estimate by a couple of cents on the back of
stronger-than-expected revenue and margins.
Revenue in the quarter was $675.1 million, up 4.2% sequentially,
particularly attributable to strong sales across a wide range of
industrial and communications infrastructure applications. The
consumer segment performed poorly in the quarter but orders started
strengthening toward the end of the period, indicating improving
trends that should lead to stronger revenues going forward.
Gross margin of 65.2% was up sequentially, driven by higher
utilization rates and a stronger mix of high-margin industrial and
communications infrastructure products.
Third Quarter Guidance
Management expects third quarter revenue between $682 million and
$702 million (a 1–4% sequential increase), operating expenses of
around $231 million and diluted earnings per share (EPS) of 54 to
58 cents.
(Detailed earnings results can be viewed in the blog titled: Analog
Sees End Market Recovery
Agreement of Analysts
For the third quarter, one estimate out of 18 total was revised
downward in the last 30 days. For fiscal
2012, two estimates declined in the same amount of
time.
The majority of analysts expect a decent third quarter with revenue
in line with the Street consensus estimates of $692 million.
However, they expect a weak fourth quarter guidance due to the
sluggish macro environment.
The analysts expect to see strength in the Communications and
Consumer end markets. They contend that 3G/4G deployments in China
and North America will drive the company’s future revenue growth.
They also believe that wireless infrastructure is another area of
revenue growth with strength in wireless base station build-outs
owing to continued expansion into China, Europe and North
America.
However, a handful of analysts expect a weak quarter due to
uncertainty in the current environment. They expect weak
demand particularly in the industrial and automotive end
markets, which together comprise roughly 65% of Analog’s total
revenue.
Magnitude of Estimate Revisions
In the past 30 days, there was no change in the Zacks Consensus
Estimate for the third quarter but the estimate for fiscal 2012
dropped by a penny to $2.15.
Over the 90-day period, the Zacks Consensus Estimate fell 2 cents
to 56 cents for the third quarter and 3 cents to $2.15 for fiscal
2012.
The weak demand environment and lower-than-expected
guidance seem to have prompted the reduction in
estimates.
Our Recommendation
Analog Devices is a leading supplier of analog and DSP integrated
circuits. We remain encouraged by the company’s dominant position
in many of its product segments, and meaningfully improved gross
and operating margin structures.
However, we do not expect Analog Devices to see a strong third
quarter due to the tough macroeconomic environment and softness
within the industrial infrastructure markets.
Analog Devices, which competes with other large analog players such
as Intersil Corporation (ISIL), Linear
Technology Corp (LLTC), Maxim Integrated
Products (MXIM) and Texas Instruments
(TXN), holds a Zacks #3 Rank that translates into a short-term
‘Hold’ rating.
ANALOG DEVICES (ADI): Free Stock Analysis Report
INTERSIL CORP (ISIL): Free Stock Analysis Report
LINEAR TEC CORP (LLTC): Free Stock Analysis Report
MAXIM INTG PDTS (MXIM): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Analog Devices (NASDAQ:ADI)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Analog Devices (NASDAQ:ADI)
Historical Stock Chart
Von Jul 2023 bis Jul 2024