Analog Devices (ADI): Assessing Valuation as Analyst Forecasts Point to Strong Earnings and Revenue Growth

Analog Devices (ADI) is set to report its latest quarterly earnings next week, and there is plenty for investors to consider. Projections call for meaningful increases in both earnings per share and revenue compared to last year, with growth expected across multiple segments.

See our latest analysis for Analog Devices.

The upcoming earnings announcement and recent investor events appear to be fueling fresh optimism around Analog Devices, as reflected in its year-to-date share price return of 9.92%. With these catalysts on the horizon, momentum seems to be strengthening after a period of sideways trading, and the company’s 1-year total shareholder return stands at 10.12%. This underscores both growth expectations and a steady long-term performance.

If these moves have you thinking about what else is building steam in tech, it could be a great time to discover See the full list for free.

But with analysts forecasting double-digit gains and sentiment already high, the key question is whether Analog Devices' current price truly leaves room for more growth or if markets have already factored in the company’s brighter outlook. Is there still a buying opportunity here, or is future growth priced in?

Most Popular Narrative: 13.1% Undervalued

The most followed narrative sets Analog Devices’ fair value at $267.47, a solid premium versus the last close of $232.32. With momentum building ahead of earnings, all eyes are on the company’s ability to deliver on high-growth expectations and justify analyst enthusiasm.

Robust expansion of AI infrastructure, green energy investments, and aerospace & defense outlays is creating healthy backlog and supply-constrained opportunities in several high-value segments. This is likely resulting in continued revenue and profitability momentum as ADI ramps internal capacity and leverages proprietary products.

Read the complete narrative.

Curious what bold assumptions are powering this bullish price target? The narrative leans on ambitious profit expansion, surging demand in key customer segments, and a future earnings multiple normally reserved for elite stocks. Want the full story behind these headline numbers and the drivers for that premium valuation?

Result: Fair Value of $267.47 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as intensifying competition in China and macroeconomic uncertainty could challenge Analog Devices' growth story and impact future profitability.

Find out about the key risks to this Analog Devices narrative.

Another View: Market Multiples Tell a Different Story

Looking through the lens of the price-to-earnings ratio, Analog Devices is trading at 58.4x, which is much higher than both the US Semiconductor industry average of 33.7x and a fair ratio of 41.5x that the market could move toward. This suggests current optimism may be pricing in a lot of future growth already. Could that mean more risk than opportunity now?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Analog Devices Narrative

If these perspectives do not align with your own, or you would rather draw your own conclusions from the data, you can create your own analysis in just a few minutes. Do it your way

A great starting point for your Analog Devices research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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