Analog Devices (NASDAQ:ADI) stock has jumped by 41% this year and by 65% in the last 12 months. This rally will be put to the test as the company publishes its third-quarter earnings report on August 19.
Analog Devices Q3 Earnings to Shed Color on Growth
Analog Devices, the giant semiconductor company, will release its third-quarter earnings, which will provide more color on its business. Its last earnings report showed that its revenue jumped by 37% in the second quarter to $3.62 billion, with its gross margin expanding to 51%. This growth was driven by its data center business, which is seeing strong demand amid the ongoing AI boom.
The other industrial areas, like aerospace and defense are benefiting from the increased spending by the Trump administration. Trump has pitched increasing defense spending to $1.5 trillion. Its industrial business is the most profitable with 15 to 20-year average product lifecycle,
Analog Devices is also benefiting from the rising demand for other areas like automation, electric test, and measurement. These sectors, collectively, grew by 40% in the first half of the fiscal year.
Analysts are optimistic that Analog Devices’ business will continue doing well in the third fiscal quarter. Benzinga data shows that the average estimate is that its revenue jumped by 36% to $3.93 billion, a notable increase for a company that has been in business for decades. Its revenue guidance for the fourth quarter is expected to be $4.07 billion, representing an annual growth rate of 32%.
Analog Devices’ earnings-per-share is expected to jump from $2.05 in Q3’25 to $3.33 in Q3’26. A look at its history shows that it has beaten and raised its earnings outlook in the last four consecutive quarters, a trend that may continue.
Options Market Predicts Modest Moves
Historically, Analog Devices stock tends to have a modest move after earnings. In the last report in May, the stock dropped by about 3.5% after the report. Before that, in February, it rose by less than 3%.
The options market is signaling that the stock will have a modest move after the earnings. Options expiring on Friday have an implied volatility of 62%, while those expiring a week later are at 52%.
Its put/call open interest ratio stands at 1.25, a sign that there are more puts than calls, which is often a bearish sign. A 3.5% upward move means that the stock will jump to above $402, while a similar drop would push it to $376.
Analysts remain highly bullish on Analog Devices, with Cantor Fitzgerald having a target of $550. KeyCorp, Fundamental Research, and Stifel Nicolaus have targets of $525, $550, and $498, respectively. The average target among analysts is $442, higher than where it is today.
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