Analog specialist Analog Devices (ADI)
has been a middle-of-the-road performer over the past year. While the
company's margins remain at or near the top of the charts, revenue
growth has been relatively less impressive and the stock performance (up
about 12% over the past year) is squarely in the middle of analog
peers/rivals like Texas Instruments (TXN), Linear Technology (LLTC), Maxim Integrated (MXIM), and ON Semiconductor (ONNN).
I'm
not looking for Analog Devices to be a huge outperformer from here. The
company's decision to steer 80% of free cash flow to shareholders won't
hurt, and neither will the company's strong position in industrial and
auto markets nor its leverage to China's LTE rollout. My discounted cash
flow model doesn't suggest all that much long-term undervaluation
today, though the company's margins do argue for a fair value closer to
the mid-$50s.
Read more here:
Healthy Auto And Industrial Markets Could Take Analog Devices A Little Further
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