Chipmaker Analog Devices (ADI) on Wednesday beat Wall Street’s targets for its fiscal third quarter, fueled by record sales of automotive and industrial semiconductors. It also guided higher for the current period. But ADI stock seesawed on the news.
The Wilmington, Mass.-based company earned an adjusted $1.72 a share on sales of $1.76 billion in its fiscal third quarter ended July 31. Analysts expected earnings of $1.62 a share on sales of $1.71 billion, according to FactSet. On a year-over-year basis, ADI earnings rose 26% while sales increased 21%.
However, the company’s sales and earnings growth slowed after four straight quarters of accelerating growth.
For the current quarter, ADI expects to earn an adjusted $1.72 a share on sales of $1.78 billion. That’s based on the midpoint of its outlook. Wall Street had predicted adjusted earnings of $1.71 a share on sales of $1.76 billion. ADI’s guidance would translate to year-over-year growth of 19% in earnings and 16% in sales.
ADI Stock Wavers After Earnings
In morning trading on the stock market today, ADI stock dropped as much as 3% before rebounding. In afternoon trading, ADI stock turned positive for a time. But it ended the regular session down 0.3% to 165.78.
“The economic recovery continues to take shape with demand still far exceeding supply, underscoring the importance of semiconductors across all industries,” Chief Executive Vincent Roche said in a news release.
He added, “Robust bookings across all end markets, combined with lean inventories and ongoing capacity additions will enable us to close this year on a high note and continue to grow into fiscal 2022.”
Truist Securities analyst William Stein reiterated his buy rating on ADI stock after the beat-and-raise report. He maintained his price target of 179.
On May 25, ADI stock broke out of a flat base at a buy point of 164.50, according to IBD MarketSmith charts. But since then it has traded in and out of the 5% buy zone. It notched a record high of 175.25 on Aug. 4 before retreating.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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