Analog Devices Stock Gains as Earnings Bring Hope for ‘True Recovery’

The semiconductor company posted earnings that beat Wall Street expectations. (Dreamstime)

Analog Devices stock rallied Wednesday after the semiconductor company posted earnings that beat Wall Street’s expectations and offered an upbeat outlook for the current quarter.

The company reported adjusted earnings of $2.05 for its fiscal third quarter, surpassing the consensus call for $1.95 among analysts tracked by FactSet. Revenue totaled $2.88 billion, above Wall Street’s forecast of $2.77 billion and up 25% from the prior year.

Analog Devices shares were up 3.8% in late morning.

“Despite geopolitical challenges, ADI’s third-quarter revenue and earnings per share exceeded the high end of our expectations,” CEO and Chair Vincent Roche said in a statement. “While tariffs and trade fluctuations are creating market uncertainty, the demand for ADI’s products remains robust.”

The company expects fourth-quarter adjusted earnings of between $2.12 and $2.32 a share and revenue of $3 billion, plus or minus $100 million. Analysts had estimated adjusted earnings of $2.03 a share on revenue of $2.83 billion for the current quarter.

People who favor the stock have banked on a recovery in demand for analog semiconductors, which measure factors like sound, light, and temperature. Wednesday’s results provide hope that the analog industry, which also includes names like Texas Instruments and ON Semiconductor , has hit bottom, said Edward Jones analyst Logan Purk.

“We think Analog’s results over the past two quarters support our view that a true recovery in their business is unfolding,” Purk wrote in a research note. The firm has a Buy rating on the stock.

Write to Nate Wolf at nate.wolf@barrons.com