Summary
- Analog Devices is well-positioned to sustain double-digit growth for the next 5 years.
- The company is reasonably valued and is investing its resources into the right places and deals.
- The future acquisition of Maxim could see the stock price fall in the short term, which would offer a good entry point.
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Thesis Summary
Analog Devices Inc. (ADI) is the largest IC manufacturer in the world. The stock has suffered from the pandemic, but like the rest of the industry, is poised for high growth in the coming years. ADI is specifically prepared to ride the coming advancements in EV and 5G technology. We believe the merger with Maxim Integrated Products (MXIM), which creates some uncertainty, might provide a pullback and a good entry point for what is a long-term buy.
(Source: IndustryWeek)
Company Overview
Analog Devices has grown exponentially since its inception in 1965 and is now the largest Integrated Circuits manufacturer in the world. This chip company covers all aspects, from production to distribution. On top of having offered great returns over the past decade, the company also pays out a dividend currently yielding 2.13%. While Analog Devices has not been immune to the coronavirus, its latest results showed some resilience in revenues.
(Source: 10-Q)
Over the last quarter, the company has managed to maintain a very similar level of revenues and the same EPS as in the third quarter of 2019. While operating income was down, this was offset by lower interest expenses and provisions for income taxes.
