Analog Devices Inc. received an upgrade from Bernstein on Friday, with the firm raising its rating to Outperform from Market Perform and lifting its price target to $465 from $430.
The upgrade follows the chipmaker’s fiscal third-quarter results, which exceeded analyst expectations. Revenue reached $4.022 billion, surpassing the Street consensus of $3.922 billion. Earnings per share came in at $3.45, above the estimated $3.35. Gross margins held steady at 72.5%, while operating expenses came in below forecasts. Shares were up 1% in U.S. premarket trading.
For the fiscal fourth quarter, Analog Devices provided guidance that outpaced analyst projections. Revenue is expected to reach $4.3 billion, compared with the Street estimate of $4.085 billion. Adjusted earnings per share are projected at $3.86, above the consensus of $3.55. Segment growth is forecast to vary, with communications expected to expand by 10% sequentially, while industrial, automotive and consumer segments are projected to grow in the high-single digits.
Analysts also noted an improvement in profitability guidance. Gross margins are projected to rise by approximately 150 basis points to roughly 74%, exceeding the Street’s 72.3% estimate. Operating margins are seen at about 52%, roughly 200 basis points above expectations.
Bernstein’s Stacy Rasgon highlighted the company’s strong execution amid an ongoing industrial recovery, attributing growth to differentiated exposure and effective channel management. The communications segment, driven by datacenter demand, was described as entering a sustainable growth trajectory, supporting both revenue and margin expansion. Rasgon also indicated that the stock’s valuation had become disconnected from its improving fundamentals, justifying the risk-reward upgrade.
Analog Devices’ shares are trading in the low 20s on the basis of the new fiscal 2027 EPS estimate, with Rasgon suggesting an EPS of $20 by fiscal 2028 appears plausible. The company’s industrial growth is estimated to exceed 50% year-over-year.
