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Semiconductor Stocks 2020 – A closer look at Analog Devices

Analog Devices is often considered to be one of the top semiconductor stocks. It is a market leader in the data conversion segment. The semiconductor space has been facing a cyclical downturn and the pandemic has proved to be an additional headwind. The company had recently reported its third-quarter 2020 results and things seem to be looking up.

Q32020 earnings results

Revenues were down 2% year-on-year at $1.45 billion. However, the 2% decline appears to be much better than the double-digit declines that the company had faced previously. The auto segment for Analog has been a difficult one as vehicle sales and production have been on a downtrend even before the pandemic. The shutdowns during the pandemic only exacerbated the problems with the auto industry. Analog Devices saw a 29% drop in its auto segment revenues. The next few quarters also look uncertain for the auto industry and the pain for Analog may not disappear anytime soon. Auto segment revenues accounted for 11% of Analog’s total revenues.

Analog is still among the best semiconductor stocks to buy

Analog’s industrial segment accounts for 53% of its revenues and is by far the largest and most important segment for the company. The revenues from this segment were up 3% during the third quarter of 2020 and the sector seems to be emerging alright from the pandemic. Factory automation is expected to be a major theme in the industrial sector and semiconductor businesses are poised to benefit as a result.

Telecommunications is also expected to be another major growth area for Analog Devices. The deployment of 5G will mean higher demand for optical transport between telecom carriers and data centers. Analog Devices experienced a 14% year-on-year growth in the communications segment of its business. These future opportunities and trends make Analog Devices one of the semiconductor stocks to buy. Analog Devices stock closed at $115.54 on 6th October 2020 and offers a 2.15% dividend yield.


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