Analog Devices, Inc. (ADI) on Q2 2021 Results - Earnings Call Transcript
Operator: Good morning, and welcome to the Analog Devices Second Quarter Fiscal Year 2021 Earnings Conference Call, which is being audio webcast via telephone and over the Web. I'd now like to introduce your host for today's call, Mr. Mike Lucarelli, Senior Director of Investor Relations. Sir, the floor is yours. Mike Lucarelli: Thank you, Cheryl, and good morning, everybody. Thanks for joining our second quarter fiscal 2021 call. Vince Roche: Thank you, Mike, and good morning to you all. So I'm very pleased to share with you that we delivered record revenue and earnings in the second quarter, exceeding the high end of our outlook. This strength was driven by our disciplined operational execution and our ability to capture the value presented as our solutions become more vital in the modern digital economy. The supply and demand dynamics in our industry have been well publicized. Broadly speaking, the economic recovery has materialized faster and stronger than initially anticipated, placing unprecedented stress on supply chains globally. Late last year, ADI moved with speed and agility, proactively making capital investments to add capacity, positioning us to navigate this disruption and better serve our customers. That said, we, like many others in the industry, will face a supply constrained environment through the balance of 2021. Despite this backdrop, we're positioned for a strong second half as our continued capital investments are aligned with robust demand. Moving to a summary of our results. Revenue was $1.66 billion, increasing 26% year-over-year. The strength was broad based, highlighted by record quarters for our industrial and automotive markets. Gross margin expanded to nearly 71% and operating margin to approximately 42%. Adjusted EPS of $1.54 increased 43% year-over-year. Prashanth Mahendra-Rajah: Thank you, Vince. Good morning, and let me add my welcome to our second quarter earnings call. My comments today with the exception of revenue and non-op expenses will be on an adjusted basis, which excludes special items outlined in today's press release. ADI delivered a record second quarter as revenue, operating margin and EPS finished above the high end of our outlook. As I mentioned last quarter, upside to our second quarter outlook would be predicated on our ability to increase production. And thanks to early strategic investments in capacity, as well as strong execution by our manufacturing operations team, we did just that. Now let's look at performance by end market. Industrial represented 59% of revenue and increased 14% sequentially, and 36% year-over-year. This quarter marks the second consecutive all-time high for industrial. We saw strength across all applications and geographies, with all sub-segments growing double digits sequentially and year-over-year. Communications represented 17% of revenue, fell slightly sequentially and was flat year-over-year. Wireline increased double digits year-over-year, which balanced softness in wireless. As we outlined in the last call, 5G builds have been muted year-to-date. However, we anticipate momentum to pick up as 5G deployments broadened globally in the second half of this year, especially in North America, now that the C-band auction is complete. Automotive represented 16% of revenue and increased 5% sequentially, and 42% year-over-year. Again, we saw double digit growth across every major application as industry production has picked up notably from a year ago. BMS grew the fastest, more than doubling year-over-year. And lastly, consumer decreased 12% sequentially in the seasonally weaker second quarter and represented 9% of revenue. Importantly, consumer grew 8% year-over-year, positioning us to deliver growth in fiscal '21. Mike Lucarelli: Thanks, Prashanth. Let's go to the Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up question, please requeue and we'll take questions if time allows. With that, Cheryl, can we have our first question please? Operator: Thank you. . Our first question comes from John Pitzer from Credit Suisse. Please go ahead. Your line is open. John Pitzer: Yes. Good morning, guys. Congratulations on the solid results. Vince, Prashanth, 90 days ago when you sort of guided for the April quarter, the key gating factor was your ability to grow supply. I'm curious, as you look at the July quarter, are you still in a supply constrained environment? And I guess more importantly, given the internal CapEx you’re spending and your work with your foundry partners, how do we think about your ability to grow supply beyond sort of the July quarter guidance? Vince Roche: Yes. So, John, thanks for the question. Yes, we are constrained. We've got a very, very positive book to build. But what we have forecast for the July quarter factors in all the elements of supply across silicon supply, both internally, externally as well as all the backend operations, assembly and test. So we feel very confident in that number. But beyond that, there is opportunity to ship more. There is more demand out there. But at least in the July quarter, we feel very comfortable with what we have forecast. John Pitzer: And how do we think about supply growth beyond July? Is July a good proxy to what you should be able to do sequentially for the next couple of quarters, or are you getting a particularly strong uplift in July and things moderate going forward? Vince Roche: Well, I think -- ultimately, everything will depend on demand. We're increasing our capacity. We're getting more wafer supply in general. And we are, as Prashanth said in his remarks, we've been investing in capital equipment inside the company to expand our backend operations. So you'll see sequential improvements in ADI’s output over the coming months. So as Prashanth said, the second half of the year, given our confidence in supply, we will have a better second half than first half. John Pitzer: That’s helpful. Thanks. Mike Lucarelli: Thanks, John. Next question? Operator: Thank you. Our next question comes from Tore Svanberg from Stifel. Please go ahead. Your line is open. Tore Svanberg: Yes. Thank you and congratulations on the record results. Prashanth, you talked about just the inventory being sort of way below the seven to eight-week target. Could you tell us where exactly the numbers are right now? And also, do you expect to get back to seven to eight at some point or is this kind of like a new norm now where disty in the channel is going to be sort of running below at what it has historically? Prashanth Mahendra-Rajah: Yes. Thanks, Tore. Inventory is very lean. We entered the quarter below seven weeks and it decreased again in the quarter. So we would like to build inventory backup. It's unlikely that that's going to happen. Whatever they get their hands on sells through immediately. So until the supply gets improved over the coming quarters, I don't think you'll see us return to normal inventory levels in the channel. But I would say that we do maintain the view that sort of that seven to eight weeks is the right balance for us to have in the channel. Tore Svanberg: Great. Thank you. Prashanth Mahendra-Rajah: Thanks, Tore. Operator: Thank you. Our next question comes from Vivek Arya from Bank of America Securities. Please go ahead. Your line is open. Vivek Arya: Thanks for taking my question. Vince or Prashanth, I was hoping you could quantify lead times and book to build in various end markets to the extent possible, where are lead times stretched the most? And importantly, what are you doing to prevent double ordering? Are you implementing any firm price, non-cancelable programs like some of your peers are? Any perspective on how do we quantify the state of supply/demand imbalance and how do we get some assurance that this will be resolved I guess peacefully is one word that comes to mind, I think that will be very helpful? Thank you. Prashanth Mahendra-Rajah: Thank you, Vivek. Maybe just to start with some comments on where demand is coming from. So we're experiencing significant growth in demand and it's very broad based in all of our markets. And when you rewind and think how we got here, our customers entered the pandemic with pretty lean inventories. Then we had this synchronized government stimulus, both fiscal and monetary. We had very strong growth during the pandemic of consumer electronics with the high use of cloud compute connectivity. We're coming out of the pandemic now with GDP driving industrial, and that's driving companies to rethink both where they manufacture and upgrading the style by which they manufacture. So on the supply side, we've been planning for additional capacity, as Vince mentioned, since late summer of 2020. And as we add capacity, our revenue forecast is increasing. And that's really what helped us deliver a better Q2 guide up for Q3 and feel good about Q4. So I think supply will eventually match demand, but I don't see demand really going away. So this feels -- given the secular drivers behind it, it feels that this is going to be with us for a while. Book to build for the past quarter was above 1, and it was the same for all end markets. So it's, again, very broad based. And I think it's really just a reflection of the incredible role that ADI’s products play across the manufacturing ecosystem. Vivek Arya: And any pricing programs that you might have put in place like your peers? Prashanth Mahendra-Rajah: I guess a few comments to make there. We are efficiently managing our orders. We're working with our customers, both large and small, across all markets to understand the demand timing and to allocate the supply based on demand. Remember that while we report on a POA basis, we actually run the business on POS. So we look through distribution to understand what's happening at customer. We've also put in a non-cancelable, non-returnable for up to 90 days to help give us better visibility into the backlog and that helps customers sort of manage what they can expect to get from us. So at this point, I would say the focus really has been on communication. And that's the feedback I think Vince has heard from customers as well is that what's important to them is communicating what they're going to get and when they're going to get it, so they can plan their respective downstream production requirements. Vivek Arya: Thank you. Mike Lucarelli: Thanks, Vivek. We’ll go to the next question please. Operator: Our next question comes from Ambrish Srivastava from BMO. Please go ahead. Your line is open. Ambrish Srivastava: Hi. Thank you very much, Prashanth and Vince. I wanted to just unpack the gross margin comments that you made, Prashanth. You are at the model 70% plus and when you talk about gross margin incrementally getting better, what's the right way to think about it? You had referred to the cost savings that you'll be getting from factory consolidation. Is there an impact from pricing? And then kind of -- and related to that, how are you managing the input cost, which seem to be going up across the board versus pricing? And is that also playing a factor in the gross margin? And sorry, related to that is would you be building inventory as you go through the second half? Thank you. Prashanth Mahendra-Rajah: Thanks, Ambrish. Do you have a few more add-ons to that? So let's start with -- let's do a quick one on, on pricing. So net impact of pricing changes are immaterial to gross margin. So we're managing our cost increases to net those out from a price standpoint. The gross margin lift that you're seeing really is the productivity that we're driving. So I did say in the first quarter earnings call that that would be the bottom of gross margins for the year and we would expect sequential improvement. You're seeing that in the Q2 results printed. You see that in the guide that we've given for Q3. That is coming from the manufacturing consolidation of the linear factory closure, which we have talked about, and also some step-up in utilization. So that's kind of a tactical way to think about how gross margins with evolved over the balance of this year. Our model remains 70%. And I don't know, Vince, if you want to give some guide on how we think about gross margins long term? Vince Roche: Yes. Look, the root of our value creation really is innovation. We're spending over $1 billion a year. And we like to have the highest performing products out there that we got well paid for. And I think also the diversity of our product application and customer domains helps us protect margins, as we've seen through the pandemic here. So 85% -- we've got 125,000 customers and 85% of our sales comes from products that individually contribute less than 0.1% of our revenue, or even less. So that's the model of the company. So there's a lot of resilience -- a lot of optionality and resilience built into it. Mike Lucarelli: Thanks, Ambrish. Ambrish Srivastava: Thank you. Operator: Thank you. Our next question comes from Blayne Curtis from Barclays. Please go ahead. Your line is open. Blayne Curtis: Hi. Good afternoon. Thanks for taking my question. Good morning. Just kind of curious on the industrial segment. I think last quarter you talked about two of six segments being at peak. You talked about all being up in the April quarter. So just any color by segment there and if any more of them are at record revenue, that would be helpful? Thanks. Vince Roche: Yes. Well, we've seen -- this is a very, very highly diversified business. We saw broad growth across all the individual sectors. In fact, all applications grew double digits year- over-year and sequentially. And I believe there's a lot more upside to come, because we're in a multiyear growth cycle driven by secular trends, Industry 4.0, et cetera. I would say the -- we've seen really strong acceleration in the automation sector. And I think that's driven by such things as the need for onshoring, more flexibility and more robust and connected supply chains. If I just pick healthcare, it has already been a multiyear growth market for ADI. And the pandemic kind of underscored the importance of information technology in managing our healthcare systems. So we've seen an acceleration in our digital healthcare business, as we begin to migrate the hospital environment to the clinic and the home with point of care solutions or healthcare anywhere mentality. And as I mentioned in the prepared remarks as well, the energy sector with the move through renewables and this charging infrastructure that's being laid in to support these electric vehicles, those are some of the areas that we're seeing strongest growth within the industrial area. But I think automation underpins it. Also, I would say, I've been very pleased with the results that we're getting in the very broad bench, scientific and test equipment, analytics equipment, and so on. So it's been very, very broad. Prashanth Mahendra-Rajah: And Blayne, just to touch on your last point about the record applications. You're right. I think last quarter, two or three had records. We increased that. Four of our six applications are at record. So I think I echo what Vince said is that we're early stages of this cycle. And yes, at some point, we expect all of our applications to be at record probably next year or so. And with that, can we go to our next question please? Operator: Thank you. Our next question comes from Toshiya Hari from Goldman Sachs. Please go ahead. Your line is open. Toshiya Hari: Thank you for taking the question and congrats on the strong results. Vince, I had a multipart question on your BMS business. You guys talked about revenue more than doubling in the quarter. I was hoping you could speak to kind of the breadth of your customer profile there on the quarter on a year-over-year basis. And I guess more importantly, based on some of the comments that you've made on past calls and also this call as it relates to your design win pipeline, should we expect some of these wireless BMS projects to ramp in fiscal '22 or is it more fiscal '23 and beyond? And lastly, as it pertains to the combination with Maxim, how should we think about how your position in BMS evolves over time post the combination? Thank you. Vince Roche: Yes. Thanks, Toshi. Well, first off, we're the market share leader in the electric vehicle battery management systems. And as you know, we have really two portfolios. We have the existing, we like to call it the wired portfolio, the more traditional way of moving data from the battery system and we've introduced a wireless version, a robust cognitive radio-based wireless system. So I think the next 12 months will be driven by the traditional wired battery technology. And after that in late '22 into 2023, we’ll begin to see the upsurge of the wireless battery technology that will complement the wired. So what I believe will happen is, today, what have we got? 2 million, 3 million cars per year being produced -- electric vehicles being produced. That's going to move to we believe somewhere 10x at least over the next seven, eight years. So this is a multiyear cycle. Where our BMS chips today are being used in over half of the top 10 selling EV cars globally, and we're getting share in each of those areas. Today, our best position is in North America and China. And as I mentioned in the prepared remarks, we're beginning to make real tracks in Europe as well as Japan and Korea. So, ultimately, if a manufacturer wants the most miles per charge, they're going to turn to ADI. So that's what we're working on. Mike Lucarelli: Thanks, Toshiya. We’ll go to our next question please. Cheryl, we'll take our next question. Cheryl? Vince Roche: Cheryl, can you hear us? Operator: Please go ahead Ross Seymore from Deutsche Bank, your line is open. Ross Seymore: Hi, guys. Can you hear me? Vince Roche: Yes, we can, Ross. Ross Seymore: Okay, great. Glad Cheryl came back. Just had a couple of questions on your communications business. I guess in the tactical sense, it looked like it was better than you expected in the quarter, the April quarter. Was that specific to the wired or wireless side, or was it just the supply coming on? And then more importantly, looking forward, can you give a little bit more color on what your expectations are for the wireless side? Obviously, we had some difficult comps with what happened with Huawei year-over-year, but how do we think about that returning to year-over-year growth, given the second half commentary that you talked about with some ramps in North America and beyond? Prashanth Mahendra-Rajah: Yes. Thanks. So I said in the prepared remarks that the communications business for the second quarter was really driven by very strong growth in the wired. I think it was up double digits. Wireless remains lumpy. But we feel pretty good that comms has bottomed in the second quarter and we're going to see growth in the second half, and I'll let Vince jump in with some of the customer conversations he's been having. But with the completion of the C-band auction, we feel very good that you're now going to see the build out of 5G for which we are the largest participant certainly with the transceiver product for both the U.S. and starting to see that in Europe as well. Vince Roche: Yes. So Ross, what I want to mention is that at this point in time the rest of world is 3x larger than China for ADI. I think that's very, very important to remember. And we're certainly seeing 5G momentum pick up on a global basis. North America, we've recently -- obviously, the C-band auction is complete. And we're beginning to see orders today that we expect will accelerate during 2022 and beyond. Even Europe, where there's been real lethargy in upgrading their communication systems in general over the last several years, we're beginning to see signs of life in the deployment of 5G. India is also -- India has a significant government funded program to make 5G a reality there. We’re beginning to participate in trials. And last but not least is O-RAN. We already have revenue as a company with Rakuten, the online shopping company in Japan and we're very well positioned given our ecosystem position there to unlock potential in what is a brand new stream of revenue, particularly I think as it gets deployed into private networks for machines. Ross Seymore: Great. Prashanth, just one quick clarification. Double digits in the wired, was that a year-over-year or a sequential comment? Thank you. Prashanth Mahendra-Rajah: That was a year-over-year. Ross Seymore: Thank you. Mike Lucarelli: Thanks, Ross. Operator: Thank you. Our next question comes from Stacy Rasgon from Bernstein Research. Please go ahead. Your line is open. Stacy Rasgon: Hi, guys. Thanks for taking my question. I actually wanted to follow up on that comm question. So if I go back to last quarter, you'd kind of talked the comm trajectory down a bit and it was a China statement. So I just want to clarify. Is that -- it doesn't sound like that's changed. It does sound like the uptick you're seeing right now is outside of China, U.S., Europe, India. I guess is that correct? I guess why didn't you see that uptick 90 days ago -- expectations for that uptick 90 days ago versus today? And then what are your broad thoughts on 5G rollout in China going forward from here? How does the rest of that play out given all the dynamics that are happening there? Vince Roche: Yes. So I think first and foremost, China's opportunistic for ADI at this point. We will sell I think lots of components, and therefore it is more opportunistic. Prashanth, you can talk about the specifics. Prashanth Mahendra-Rajah: Yes. I think, Stacy, we have always said that we expected 5G deployments in North America to come next and be followed by Europe. When we gave you the commentary for the -- leaning into the second quarter, we were focused on the pause in China. But we have seen now that the auctions are complete, and particularly Verizon being much more public about what they intend to do in the 5G space, as Vince mentioned, orders are starting to come in for that. So the trajectory for communications or for wireless specifically is going to be up in the second half. Mike Lucarelli: Thanks, Stacy. Stacy Rasgon: Thank you. Mike Lucarelli: Can we go to our last question please? Operator: Thank you. And our last question comes from William Stein from Truist Securities. Please go ahead. Your line is open. William Stein: Great. Thanks so much for squeezing me in. Guys, I'd like to ask about the cost function. We have two potential looming problems. I think one is inflation broadly, not just materials, potentially labor as well. And then on the OpEx side, the return to work face-to-face sort of operations suggest maybe we start spending on travel and things like that. And I wonder if you can comment as to how we might sensitize our models to these factors? Thank you. Prashanth Mahendra-Rajah: So let me take the inflation piece first. So I think it was Ambrish who asked a question and we are seeing cost increases from our supply base, but we feel that we're guiding margins on a net basis are going to be neutral for that, because we are where we can pushing that price through. So I'm not as concerned about the inflation side. We have been very mindful of the labor side. And I would say that the data we're seeing is that it's taking us about a week longer than normal to fill jobs at the factory level. So our U.S. factories are facing a little bit longer time to fill jobs, but it's not anywhere as dramatic as what we're hearing in the media in terms of filling these high paying manufacturing jobs. And then for return to office, that is something we spend a lot of time on. There is no doubt that there will be some return to travel. I think that's going to be universal across all companies. But more specifically to how ADI is thinking about return to office, maybe I'll let Vince talk about how we're thinking about that. Vince Roche: Yes. So we've instituted a three-day per week policy to start with here at ADI for those who have been working remotely, and we will see where things go from there. But my sense is on the OpEx side of things, we will probably not get back to per capita travel spend, entertainment spend and so on and so forth. The other thing I'll remind you, Will, is that we work relentlessly at the company on taking costs out of the business. So we work hard on cost of goods, we work hard on making the business efficient below the cost of goods line as well. So inflation is nothing new. We'll see how it moves over the next -- if we see an acceleration in inflation, then we'll figure out what actions to take. William Stein: So we shouldn't be modeling some step-up cost function in OpEx related to travel and such activities? I know there's some increase you've already guided to for I think bonuses and such, but for travel no? Vince Roche: Well, I think that's true. And when you look at the expenses today, our OpEx is laden with some very rich bonus payouts, because the business in terms of growth and profitability is doing very, very well. But we will -- over time, I expect that the growth will moderate and the bonuses will also moderate. Prashanth Mahendra-Rajah: Will, maybe I can wrap up by saying we're expecting second half revenue to be strong. We indicated that second half gross margins are going to continue to increase, which is going to give you incredible leverage and therefore there is no reason you won't see a meaningful lift in op margins as each quarter rolls out. And all of that is going to translate into more cash flow, which we'll have available to deploy since we're not doing any further debt reduction, that's coming back to shareholders. William Stein: Great. Thanks so much. Mike Lucarelli: Thanks, Will, and thanks everyone for joining us this morning. A copy of the transcript will be available on our Web site. Our reconciliations will also be there. You can also find our new CSR report that Vince outlined in his script on our Analog Investor Relations homepage. And with that, thanks for joining us and your continued support of ADI. Operator: This concludes today's Analog Devices conference call. You may now disconnect.ADI Ratings Summary
ADI Quant Ranking
Related Analysis
Analog Devices Upgraded to Buy at Edward Jones
Edward Jones upgraded Analog Devices (NASDAQ:ADI) from Hold to Buy, recognizing the company's advantageous position to gain from the increasing demand for automation.
The analysts pointed out that the expansion of automated and connected devices across various sectors will likely lead to a higher number of chips required per device. This trend is expected to benefit Analog Devices significantly.
Furthermore, the firm anticipates a surge in chip demand due to the evolution of the automotive industry. Cars with advanced features and a shift towards more electric vehicles are predicted to necessitate a greater number of chips per vehicle.
The analyst also noted the unique advantages of Analog Devices' hybrid manufacturing approach. This strategy is believed to yield higher cash flow and require less capital investment compared to industry peers, thus enhancing the company's financial flexibility.
Currently, ADI's shares are trading at about 20 times Edward Jones' fiscal 2025 earnings estimate. This valuation aligns with its historical average. Despite ADI's recent underperformance compared to other technology stocks, partly due to a slowdown in chip demand and growth, the analysts see the shares as attractively valued and believe in the company's potential for recovery and growth.
Analog Devices Stock Plunges 7% on Guidance Miss
Analog Devices (NASDAQ:ADI) shares dropped more than 7% on Wednesday after the company reported its Q2 earnings results. While both EPS of $2.83 and revenue of $3.26 billion came in better than the Street estimates of $2.75 and $3.21 billion, respectively, guidance missed the consensus estimates.
The company continued benefiting from rising semiconductor content in Automobile, Communications, and Industrial markets during the quarter.
For Q3/23, the company expects EPS to be in the range of $2.42-$2.62, compared to the Street estimate of $2.65, and revenue in the range of $3-$3.2 billion, compared to the Street estimate of $3.16 billion.
Analog Devices’ Upcoming Q2 Earnings Preview
RBC Capital analysts provided their outlook on Analog Devices (NASDAQ:ADI) ahead of the upcoming Q2 earnings, scheduled on May 24.
The analysts see an in-line setup to Q2 Street sales/EPS estimates of $3.2 billion/$2.75 but stand cautious on Q3 as semi correction progresses.
Counter to peers, management posted beat/raise results led by auto/industrial. Industrial (52% of total revenue) was up 26% year-over-year in Q1 led by automation, sustainable energy, instrumentation, and test. Auto (22% of total revenues) up 30% year-over-year in Q1. According to the analysts, Q2 is expected up slightly.
Analog Devices’ Upcoming Q2 Earnings Preview
RBC Capital analysts provided their outlook on Analog Devices (NASDAQ:ADI) ahead of the upcoming Q2 earnings, scheduled on May 24.
The analysts see an in-line setup to Q2 Street sales/EPS estimates of $3.2 billion/$2.75 but stand cautious on Q3 as semi correction progresses.
Counter to peers, management posted beat/raise results led by auto/industrial. Industrial (52% of total revenue) was up 26% year-over-year in Q1 led by automation, sustainable energy, instrumentation, and test. Auto (22% of total revenues) up 30% year-over-year in Q1. According to the analysts, Q2 is expected up slightly.
Analog Devices Shares Surge 7% on Q1 Beat & Strong Guidance
Analog Devices (NASDAQ:ADI) shares gained more than 7% on Wednesday after the company reported its Q1 results, with EPS of $2.75 coming in better than the Street estimate of $2.61. Revenue of $3.25 billion beat the Street estimate of $3.15 billion.
While lead times have shortened for much of the portfolio and longer-term cancellations have risen, the company cited still-strong demand in its core end markets of Industrial and Automotive and resumed its more bullish tone that it adopted on its November earnings call.
For Q2, the company expects EPS in the range of $2.65-$2.85, compared to the Street estimate of $2.42. Q2 revenue is seen at $3.1-3.3 billion, beating the Street estimate of $3.03 billion, once again bucking the trend of its competitors which almost universally guided below Street expectations this earnings season.
Analog Devices Shares Surge 7% on Q1 Beat & Strong Guidance
Analog Devices (NASDAQ:ADI) shares gained more than 7% on Wednesday after the company reported its Q1 results, with EPS of $2.75 coming in better than the Street estimate of $2.61. Revenue of $3.25 billion beat the Street estimate of $3.15 billion.
While lead times have shortened for much of the portfolio and longer-term cancellations have risen, the company cited still-strong demand in its core end markets of Industrial and Automotive and resumed its more bullish tone that it adopted on its November earnings call.
For Q2, the company expects EPS in the range of $2.65-$2.85, compared to the Street estimate of $2.42. Q2 revenue is seen at $3.1-3.3 billion, beating the Street estimate of $3.03 billion, once again bucking the trend of its competitors which almost universally guided below Street expectations this earnings season.
What to Expect From Analog Devices Q1 Earnings Today?
Deutsche Bank analysts provided their outlook on Analog Devices, Inc. (NASDAQ:ADI) ahead of the company’s upcoming Q1/23 earnings announcement today before the market opens.
The analysts see mixed trends heading into the report. On one hand, macro/business trends have clearly deteriorated over the last 90 days. On the other hand, the company's backlog remains extended even after extensive scrubbing, and Street estimates already contemplate a sub-seasonal decline in the April quarter.
Thus, while the analysts do expect a more cautious tone from the company in general to reflect elevated customer inventories and softer end demand, they still anticipate this quarter’s print/guide to be largely in-line with downward adjustments more likely to occur in out-quarters to yield slightly negative revisions to 2023/2024 estimates as the company’s elevated backlog normalizes.
