Analog Devices, Inc. (NASDAQ:ADI) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Analog Devices reported US$9.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.28 beat expectations, being 3.9% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Analog Devices after the latest results.
Following the latest results, Analog Devices' 26 analysts are now forecasting revenues of US$10.2b in 2025. This would be a satisfactory 7.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 23% to US$4.05. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$10.3b and earnings per share (EPS) of US$4.79 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
The consensus price target held steady at US$252, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Analog Devices at US$295 per share, while the most bearish prices it at US$212. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Analog Devices shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Analog Devices' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Analog Devices' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 7.9% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 20% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Analog Devices.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Analog Devices' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$252, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Analog Devices. Long-term earnings power is much more important than next year's profits. We have forecasts for Analog Devices going out to 2027, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Analog Devices you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
