How Does Recent Semiconductor Optimism Impact Analog Devices’ Share Price in 2025?

• Ever wondered if Analog Devices stock is actually worth its current price, or if the market might be missing something? Let’s break things down so you can judge for yourself.
• Over the past week, the share price dipped by 2.2%, but it is still up 9.9% year to date and 10.4% over the past 12 months, adding to a strong multi-year track record.
• Recent news coverage has highlighted continued optimism for the semiconductor sector, with analysts noting Analog Devices’ strong positioning in industrial and automotive applications. This industry enthusiasm has influenced recent trading activity, though investors remain attentive to evolving macro trends.
• For those focused on valuation, Analog Devices currently scores 1 out of 6 on our value checks. This means it is considered undervalued in just one area. In the sections ahead, we will explain what this score really means and present a more insightful approach to valuation.

Analog Devices scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Analog Devices Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model aims to estimate a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s value. This helps investors understand what a business could fundamentally be worth, based on its ability to generate cash over time.

For Analog Devices, the most recent Free Cash Flow (FCF) reported stands at about $3.33 billion. According to forecasts, this figure is expected to steadily grow, reaching an estimated $6.31 billion by 2029. Notably, while analysts provide estimates for the next five years, projections beyond that are extrapolated to paint a longer-term picture. These forward-looking cash flows all use the $ as the reporting currency.

After crunching the numbers using the 2 Stage Free Cash Flow to Equity DCF model, the estimated intrinsic value per share comes out to $146.03. However, based on the current share price, this suggests the stock is trading at a 59.0% premium over its calculated fair value. This implies it is substantially overvalued on this basis.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Analog Devices may be overvalued by 59.0%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Analog Devices.

Approach 2: Analog Devices Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation measure for profitable companies like Analog Devices because it directly weights the company’s market price against its current earnings. For businesses with healthy profits, the PE ratio quickly communicates how much investors are willing to pay today for a dollar of earnings, making it a go-to tool for comparing value.

However, a "normal" or "fair" PE ratio does not exist in isolation. It depends on how quickly the company is expected to grow and the risks it faces. Fast-growing, less risky companies command higher PE ratios, while slower-growth or riskier ones usually see lower multiples. Investors look at the sector average and peers to benchmark what is fair for a specific company.

Analog Devices currently trades at a PE ratio of 58.4x, which is well above both the semiconductor industry average of 34.1x and its peer group’s 64.7x. To provide a more tailored benchmark, Simply Wall St calculates a Fair Ratio, in this case 41.6x, taking into account the company’s unique profile, including its earnings growth outlook, margins, market cap, and risk factors. This Fair Ratio is more robust than simply comparing companies side by side because it adapts to the specifics of Analog Devices rather than applying a one-size-fits-all average.

Since Analog Devices’ actual PE of 58.4x is significantly higher than its Fair Ratio of 41.6x, the stock appears overvalued by this measure.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1423 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Analog Devices Narrative

Earlier, we mentioned there is an even better way to understand valuation. Let’s introduce you to Narratives, an easy and dynamic tool available within the Simply Wall St Community that helps millions of investors make smarter decisions about when to buy or sell.

A Narrative is your story behind a stock’s numbers, linking your expectations for Analog Devices’ revenue, earnings, margins, and risks to a forward-looking forecast and ultimately a fair value estimate. Instead of relying solely on traditional metrics, Narratives empower you to anchor your investment thesis in concrete financial outcomes. You can then compare your Fair Value to the live market price, which may help you act confidently when opportunity arises or risks increase.

Narratives are continuously updated as news breaks, earnings are released, or market trends shift, ensuring your thesis and forecasts stay current and relevant. For example, some investors’ Narratives for Analog Devices highlight high double-digit earnings growth fueled by industry automation and green energy, driving a bullish fair value of $310 per share. Others focus more on risks such as competition and volatility, setting a fair value closer to $155. Your perspective shapes your Narrative, giving you more control and clarity in your investing journey.

Do you think there's more to the story for Analog Devices? Head over to our Community to see what others are saying!

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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