Pundits Predicting Panic in Analog Devices, Inc. (ADI)?

The exact reason why investors have been taking up Analog Devices, Inc. (NASDAQ:ADI) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 14 March, the shares accumulated 0.17 points or 0.16 percent at $108.25 with a light trade volume of 1.954 million shares. After opening the session at $108.39, the shares went as high as $108.39 and as low as $107.12, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $40 billion and now has 369.26 million shares outstanding. Analog Devices, Inc. (ADI) stock has gained 4.03 percent of market value in 21 trading days.

ADI stock has a trailing 3-year beta of 1.24, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $4.26 a share in the trailing twelve months. The stock’s value has surged 26.12 percent year to date (YTD) against a rise of 14.36 percent in 12 month’s time. The company’s shares still trade -1.12 percent away from its 1-year high of $109.48 and 41.28 percent up from 52-week low of $76.62. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Analog Devices, Inc. (ADI) will probably climb 5.8 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $130-month high price target. This represents a whopping 20.09 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $117.5, which represents a return potential of 8.55 percent when compared to the closing price of the stock of $108.25 on Thursday, March 14. The lowest price target for the stock is $90 — slightly more than -16.86 percent from ADI’s current share price.

History has shown that shares in Analog Devices, Inc. have gone up on 21 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. Investors will get their next glimpse of ADI’s Q2 earnings on May 31. Analysts are forecasting revenue to suffer decline of -0.7 percent to $1.5B in the fiscal second quarter, while earnings are seen soaring by nearly -10.34 percent to $1.3 per share. It earned $1.33 per share, better than the $1.28, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $1.54B, better than the $1.51B analysts expected. Earnings are estimated to increase by 99 percent this year, 9.76 percent next year and continue to increase by 9.34 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $107.45. Below this, the next support is placed in the zone of $106.65. Till the time, the ADI stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 65.69 on daily chart, which may remain a cause for concern. If the price breaks below $106.65 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $108.72 mark may result into a pull-back move towards $109.19 level.

Shares of Analog Devices, Inc. (ADI) are trading at a P/E ratio of 43.87 times earnings reported for the past 12 months. The industry ADI operates in has an average P/E of 247.18. Its P/E ratio went as low as 18.72X and as high as 27.34 over the 5-year span.Further, it is sporting a 6.47 on the Price-to-Sales ratio. Compare this with the industry average P/S of 10.83. 68 percent is the gross profit margin for Analog Devices, Inc. and operating margin sits at 0 percent. Along with this, the net profit margin is 0 percent.