Shares of Analog Devices (NASDAQ:ADI), a chipmaker specializing in integrated circuits used in analog and digital signal processing, declined by over 8% after the company reported second-quarter results.
Analog Devices’ earnings per share and revenue topped consensus, but its forecast for the third quarter came in below expectations, disappointing Wall Street.
Its forecast called for revenue of $3 billion to $3.2B, compared to the consensus of $3.16B, with EPS of $2.42 to $2.62, compared to estimates of $2.65.
Commenting on the quarter, CEO and Chair Vincent Roche said, “We expect revenue to moderate given the continued economic uncertainty and normalizing supply chains. However, I am confident in ADI’s ability to navigate short-term business cycles due to the strength and diversity of our franchise, our hybrid manufacturing model, and alignment to secular growth trends.”
Limited China recovery and moderation in industrials and auto are expected to weigh on performance in the second half, noted KeyBanc analysts.
“ADI anticipates a 2H correction as customers destock excess inventory, primarily due to limited signs of a recovery in China post CNY, but also noted moderation in NA/Europe. B2B is below 1 across all segments with backlog coverage for F3Q now at normal levels at 80-85%. Normal seasonal trends are expected in F1Q24 with a resumption in q/q growth in F2Q24,” said the analysts.
KeyBanc lowered estimates but still thinks ADI remains well-positioned long term.