Financial Report Preview | Strong Growth in Industrial Sector to Resist Tariff Risks. Analog Devices, Inc.(ADI.US) Received Positive Ratings from Morgan Stanley and Citigroup Ahead of Earnings.

Analog Devices, Inc. (ADI.US) will announce its second quarter results before the US stock market opens on May 22. It is widely expected in the market that the company's revenue will increase by 16.3% year-on-year to reach $25.1 billion, in contrast to a 33.8% decrease in the same period last year. Adjusted earnings per share are expected to be $1.70. In the previous quarter, Analog Devices, Inc. exceeded analysts' expectations with revenue of $24.2 billion, a 3.6% decrease compared to the previous year. For the company, it was a strong quarter, and its earnings per share guidance exceeded analysts' expectations, and adjusted operating profit guidance also showed stability. Bullish sentiment on Wall Street According to Morgan Stanley, despite the uncertainty around semiconductor tariffs, Analog Devices, Inc.'s strong growth performance in the industrial and automotive sectors is still promising. The bank's analysts expect that the company's upcoming quarterly results and outlook will meet market expectations and maintain a "hold" rating with a target price of $214. Analysts led by Joseph Moore stated that despite the impact of tariff dynamics, the performance of the analog chips/MCU sector in this quarter has been quite positive. Texas Instruments Incorporated (TXN.US) reported better-than-expected performance and raised guidance, and NXP Semiconductors NV (NXPI.US) met expectations in the March quarter, reflecting a mixed demand environment but with customer inventories generally at their lowest levels. Analog Devices, Inc. managed the reduction in customer inventories well, with distribution channel inventories at low levels, strong growth in the automotive business, and certain advantages in the industrial sector such as testing equipment, medical devices, and data centers. Analysts expect that Analog Devices, Inc.'s revenue in this quarter will reach $25.1 billion, a 16% increase year-on-year, a 3.4% increase quarter-on-quarter, in line with market consensus. Industrial sector revenue is expected to be $11.5 billion, and automotive sector revenue is expected to be $7.5 billion, with increases of 15.1% and 12.6% respectively. Although consumer and communication sector revenues may see a slight decline quarter-on-quarter, overall recovery trends are still evident. However, compared to its counterpart Texas Instruments Incorporated, Analog Devices, Inc.'s outlook for the industrial market may be more conservative. Although Analog Devices, Inc. has a higher exposure to the industrial market (accounting for 45% of its revenue, higher than Texas Instruments Incorporated's 34%), the company may choose cautious financial guidance due to the uncertainty surrounding tariffs. Morgan Stanley believes that in the current environment, conservative expectations are more beneficial for investor confidence. The bank also emphasized that although the analog chip industry is in a recovery phase, the recovery is more likely to be "U-shaped" rather than "V-shaped" due to the uncertainty of semiconductor tariffs and export controls. With its high-quality business portfolio and stable profit margins, Analog Devices, Inc. has become the most defensive analog chip company covered by Morgan Stanley. Citigroup is also particularly optimistic about Analog Devices, Inc., mainly due to the strong order growth trend in the analog chip market (especially the industrial sector, which accounts for nearly half of the company's revenue). As a result, Citigroup analyst Christopher Danely has raised the target price from $235 to $260, reiterating a "buy" rating and listing it as Citigroup's top recommended target. Citigroup further points out that Analog Devices, Inc. is not only expected to surpass market expectations for the second quarter, but may also raise guidance for the next quarter. Despite concerns in the market about tariff policies and the economic situation in the second half of 2025, Citigroup firmly believes that with a comprehensive recovery in demand, the company will achieve significant sales and profit growth. Analysts particularly emphasized that Analog Devices, Inc.'s positioning in stable markets with long cyclical characteristics, such as industrial and automotive sectors, is its core competitive advantage. Similarly, although Cantor Fitzgerald maintains a "neutral" rating, it has raised its target price from $230 to $250. Analyst CJ Muse from the firm pointed out that given the overall stable market signs and the strong performance of the company's various business segments, this chip manufacturer is expected to deliver a report card of "better-than-expected earnings and raised guidance". However, Cantor believes that while Analog Devices, Inc. is a preferred target in the semiconductor sector, the risk-return ratio for the current stock price has become more balanced.