What is the market’s view of Analog Devices’ future operating performance as reflected in the current price of $194? Over the next 6 years, Analog Devices shares will need to reach $325 to achieve average annual stock market performance of 9.0%. Analog Devices’ stock price will need to reach $382 by 2029 to achieve upper quartile performance.
Executive Summary
- Price Target Research identifies Analog Devices as having: high financial strength, high expected growth, instability, and low profitability. A big positive influence on Analog Devices’ valuation is its superior Growth.
- Average valuation, above market shareholder returns. Current valuation levels are average relative to the Analog Devices Peer Group. Recent market returns have outperformed the Analog Devices Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Analog Devices shares should reach a level of $570 by 2029 — an 21.3% per year total shareholder return. A 2029 stock price of $325 would reflect median performance and a price of $382 would be required to reach upper quartile performance.
- Growth has been Analog Devices’ biggest valuation strength. Historical growth has been very high relative to the Analog Devices Peer Group and forecasted growth is relatively very high. Asset Growth, Equity Growth, EPS Growth, and Revenue Growth have all been superior. These factors have buoyed market perceptions of Analog Devices. Analog Devices’ historical income statement growth and balance sheet growth have diverged. Revenue growth has exceeded asset growth; earnings growth has paralleled equity growth and return on equity has been stable. Analog Devices’ consensus growth expectations are lower than historical growth.
- Pretax ROA, and Pretax Margin are group leading. These factors have strengthened market perceptions of Analog Devices. The company has normal cash needs.
- Analog Devices’ risk profile is neutral. Overall variability has been very high with very high revenue variability, relatively low E.P.S. variability, and very high stock price volatility. Financial Strength is relatively very high and earnings’ expectations are very low. The debt/capital ratio has declined very significantly.
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