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Analog Devices

Analog Devices Inc recently reported its Q22020 earnings. Revenues were down 14% Y-o-Y. Revenues from the communications and automotive segments had the largest Y-o-Y falls at 24% and 23% respectively. Analog Devices clocked second-quarter revenues of $1.32 billion. This number was a shade below analyst estimates. However, the earnings per share came in at $1.08 which was above analyst expectations of $1.04.

According to Prashanth Mahendra-Rajah, CFO, Analog Devices, “I’m pleased to say that our second-quarter results were within our original guidance, with revenue of $1.32 billion, operating margin of 38% and EPS of $1.08. Without (COVID-induced) capacity limitations, we believe revenue would have been above our original midpoint provided at our first-quarter earnings, or approximately $50 million higher.”

Analog Devices appears to be going through a down cycle as earnings have now declined for six consecutive quarters. Revenues have also decreased for four quarters consecutively. While the pandemic did affect the business of Analog Devices, the adverse impact was mitigated due to the multitude of markets that the company serves. Vincent Roche, Chief Executive, said, “We moved quickly to pivot manufacturing lines and prioritize our healthcare solutions that are needed in the fight against COVID-19. This has allowed us to expedite supply used in products, such as ventilators, respirators, imaging systems, and patient monitors to our healthcare customers.”

Longer-term prospects for the company appear to be intact as the arrival of 5G, driverless cars, and electric cars is expected to boost demand for products that Analog Devices makes. Analog Devices products include integrated chips based on analog, digital, and mixed-signal processing technology. These chips play a vital role in virtually all types of electronic equipment.

Analog Devices stock price closed at $114.68 on 27th May 2020, up 4.64% for the month.

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