Earnings Preview: Analog Devices - Analyst Blog
26 Novembro 2012 - 7:50AM
Zacks
Analog Devices,
Inc. (ADI) is scheduled to announce its fiscal
fourth-quarter 2012 results on November 27. We see a few downward
revisions in analyst estimates prior to the earnings release.
Prior-Quarter
Synopsis
Analog Devices' third quarter 2012
pro forma earnings of 56 cents were in line with the Zacks
Consensus Estimate.
Revenue in the quarter was $683.0
million, up 1.2% sequentially and just within management’s revenue
guidance range of $682–$702 million, attributable to strong sales
across a wide range of communications infrastructure applications,
partially offset by weakness in the automotive and industrial
segments.
Gross margin of 65.6% was up
sequentially on account of slightly better utilization rates.
However, operating margins shrunk 43 basis points (bps)
sequentially due to special charges related to restructuring
activity.
Fourth Quarter
Guidance
Management expects fourth quarter
revenue between $685 million and $715 million (a 0–5% sequential
increase), gross margin of 65%, operating expenses of around $231
million and diluted earnings per share (EPS) of 54 to 60 cents.
(Detailed third quarter earnings
results can be viewed in the blog titled: Analog’s Guidance
Disappoints Again
Agreement of
Analysts
Out of the 20 analysts providing
estimates for the fourth quarter, 2 analysts made downward
revisions while 1 out of 22 analysts providing estimates for fiscal
2012 made a downward revision in the last 30 days.
The majority of analysts expect
fourth quarter revenue/earnings to come in below Street consensus
estimate due to a weak overall demand environment. They expect poor
demand particularly in the Industrial and Communications end
markets, which together comprise roughly 67% of Analog’s total
revenue.
They also expect a weak first
quarter guidance due to the sluggish macro environment and tight
inventory management.
However, a few analysts believe
that share gains in its Automotive and Consumer segments could help
to mitigate the decline. The analysts also remain positive about
the fact that the company has none to very little PC exposure and
believe that the consumer business is expected to grow at a robust
pace.
Magnitude of Estimate
Revisions
In the past 30 days, the Zacks
Consensus Estimate remained unchanged at 57 cents and $2.13 for the
fourth quarter and fiscal 2012, respectively. The Zacks Consensus
Estimates also remained unchanged over the 90-day period.
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, given recent weak reports
by its peers, the continued macro sluggishness and continued
softness within the industrial infrastructure markets, we do not
expect Analog Devices to report a strong fourth quarter.
Currently, Analog Devices has a
Zacks #4 Rank (short-term Sell rating), reflecting end market
weakness and a disappointing fourth quarter guidance provided by
management.
We note that analog peer
Intersil Corporation (ISIL) also carries a Zacks
#4 Rank, although others like Maxim Integrated
Products (MXIM) and Texas Instruments
(TXN) carry a Zacks #3 Rank (short-term Hold rating).
ANALOG DEVICES (ADI): Free Stock Analysis Report
INTERSIL CORP (ISIL): Free Stock Analysis Report
MAXIM INTG PDTS (MXIM): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
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