Robust Portfolio To Drive Analog Devices (ADI) Q1 Earnings
Zacks Investment Research | Feb 25, 2018 09:37PM ET
Analog Devices, Inc. (NASDAQ:ADI) is set to report first-quarter fiscal 2018 results on Feb 28.
The company topped the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive earnings surprise of 16.34%.
Last quarter, Analog Devices delivered a positive earnings surprise of 5.84%. Earnings of $1.45 per share went up 15.1% sequentially and 38.1% on a year-over-year basis. Revenues also increased 7.5% sequentially and 53.6% year over year to $1.54 billion. Top-line growth was driven by strong end market results.
Seasonality to Hurt Q1 Results
For first-quarter fiscal 2018, revenues are anticipated in the range of $1.44-$1.54 billion. Non-GAAP earnings are expected between $1.20 and $1.36 per share.
The first-quarter that ended on Jan 31, 2018 was a 14-week quarter. Management expects a full week's revenue benefit from this extra week. However, post adjusting revenues for this extra week, total revenues are anticipated to decline sequentially at the mid-point of the guidance range.
Moreover, Analog Devices had expected B2B markets of industrial, automotive and communications in aggregate to decrease in the mid-single-digits sequentially in the seasonally slower first quarter. However, revenues were expected to increase on a year-over-year basis due to strength in the industrial end-market.
Let’s see how things are shaping up for this announcement.
Strong End Markets, Portfolio: Key Catalysts
We expect strength across all the four end-markets — Industrial, Consumer, Communications and Automotive — to drive the soon-to-be reported quarter results. Moreover, ongoing investments are likely to strengthen product portfolio as well as competitive position, which will boost the top line.
We believe that top-line growth is likely to be driven by Analog Devices’ diversified product portfolio and expanding customer base. Moreover, higher contribution from Linear Technology (NASDAQ:LLTC) acquisition remains a tailwind.
Further, Analog Devices is likely to benefit from increasing demand for autonomous driving solutions. Additionally, continuing demand for high value signal processing & power management applications, software-defined radio solutions and portable applications are anticipated to drive the top line.
The Zacks Consensus Estimate for Industrial, Automotive, Communication and Consumer segment revenues are currently pegged at $704 million, $231 million, $272 million and $234 million, respectively.
What Our Model Suggests
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Original post
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