Chipmaker Analog Devices on Wednesday beat Wall Street's targets for its fiscal third quarter and guided slightly higher than views for the current period. ADI stock rose on the news.
The Wilmington, Mass.-based company earned an adjusted $1.58 a share on sales of $2.31 billion in the quarter ended Aug. 3. Analysts polled by FactSet had expected earnings of $1.51 a share on sales of $2.28 billion. However, on a year-over-year basis, Analog Devices earnings fell 37% while sales declined 25%.
Analog Devices' fiscal Q3 report marked its fifth straight quarter of declining sales and earnings as it navigates a cyclical downturn in demand. Analysts predict the declines will continue for two more quarters.
For the current quarter, Analog Devices forecast adjusted earnings of $1.63 a share on sales of $2.4 billion. That's based on the midpoint of its outlook. Analysts had been looking for earnings of $1.62 a share on sales of $2.38 billion in the fiscal fourth quarter. In the year-earlier period, Analog Devices earned an adjusted $2.01 a share on sales of $2.72 billion.
ADI Stock Rises After Report
On the stock market today, ADI stock climbed 1.8% to close at 227.50, back above its 50-day moving average.
"As we navigate this business cycle's nascent recovery, our high-performance analog solutions portfolio positions us well to intersect the strong underlying stream of concurrent secular trends," Chief Executive Vincent Roche said in a news release.
Analog Devices makes radio frequency, power management and sensor semiconductors. Its chips are used in industrial, communications, automotive and consumer markets.
Chief Financial Officer Richard Puccio expressed cautious optimism in the market's recovery.
"Improved customer inventory levels and order momentum, across most of our markets, position us to grow again sequentially in our fourth quarter, increasing our confidence that we are past the trough of this cycle," Puccio said in the release. "However, economic and geopolitical uncertainty continues to limit the pace of the recovery."
ADI stock ranks seventh out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
