Analog Devices Stock: A Compelling Buying Opportunity

The recent downturn in chip demand is nearing its end, making Analog Devices stock an attractive investment, according to a report from Morgan Stanley.

Analyst Joseph Moore has upgraded his rating for Analog Devices shares (ticker: ADI) from Equal-weight to Overweight. He has also raised the price target for the stock from $176 to $225.

Positive Outlook

Moore believes that although the bottom may not have been reached yet, it is in sight. While next week’s report may be mixed at best, it has the potential to be the “last cut.”

Analog Devices will be reporting its fiscal fourth-quarter earnings on Tuesday, and the stock has already shown a 1.5% increase to $182.55 in midday trading on Friday.

Historical Analysis

The analyst points out that out of the past eight chip downturns, six have lasted between 22 and 26 months. He suggests that Analog Devices chip shipments peaked in May 2022 before beginning the current decline, indicating that the bottom may be reached around May 2024.

Additionally, Analog Devices has consistently outperformed its peers in terms of profitability during previous chip downturns.

Superior Market Position

Analog Devices boasts a wide-ranging portfolio of chips that cater to various sectors and industries. With over 125,000 customers, the company has established itself as a core player in the analog space.

Impressive Performance

Over the past 12 months, Analog Devices stock has registered a 13% increase. In comparison, the iShares Semiconductor ETF (SOXX), which tracks the performance of the ICE Semiconductor Index, has risen by 38%. The S&P 500 has seen a 14% increase.

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