Analog Devices beats Wall Street earnings estimate in FQ2

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Analog Device is withdrawing its FQ2 outlook amid the coronavirus pandemic.
Image: Analog Devices

May 20—Analog Devices reported fiscal second-quarter earnings results that beat Wall Street expectations today. Despite withdrawing its FQ2 outlook in late March, the firm’s performance fell in line with its previously issued guidance.

The Norwood, Massachusetts-based semiconductor company also offered a fiscal third-quarter forecast that indicates its sales are stable in the current period.

Analog Devices’ FQ2 Results

Although the coronavirus pandemic introduced significant disruption into the firm’s supply chain, it persevered in the face of adversity. In the period ending May 2, the signal processing IC manufacturer generated $1.317 billion in revenue, net cash of $429 million, and adjusted earnings per share (EPS) of $1.08.

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On an annual basis, the firm’s revenue, income, and adjusted EPS fell by 14, 78.4, and 20.5 percent, respectively. That said, the semiconductor company’s results managed to outpace Zacks Equity Research’s EPS prediction of $1.05.

Analog Devices’ earnings also fell within the range it offered with the announcement of its fiscal first-quarter results.

Notably, the company produced better-than-expected quarterly income even after its April pledge to prioritize that shipment of medical device components. CEO Vincent Roche attributed his corporation’s resilience to the speed and agility of its team members.

Near-Term Stability

Roche also noted his firm is “well-positioned to accelerate in the recovery phase,” a sentiment reflected in its fiscal third-quarter guidance.

In the June period, Analog Devices expects to make $1.3 billion, plus or minus $70 million, with adjusted EPS of $1.08, with a variable $0.11. On the one hand, the company’s forecast represents a decline from the $1.48 billion and $1.26 EPS it made in FQ3 2019. But on the other, it indicates the company will keep its sales consistent with the March quarter.

Earlier this year, COVID-19 caused significant manufacturing capacity problems, and it also started hurting component demand. Indeed, vehicle and smartphone purchases slid precipitously because of global economic contraction, which affected auto and consumer electronics part orders. Although Analog Devices is not immune from worldwide trends, its FQ3 revenue projection suggests its product demand has remained consistent.

Given the level of disruption prompted by the coronavirus pandemic, recovery from the outbreak will not be swift or easy. However, brands that exhibit the resilience shown by Analog Devices will return to growth sooner rather than later.

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