Chipmaker Analog Devices on Wednesday missed Wall Street's targets for its fiscal third quarter as customers work through high inventories. It also slashed views for the current period. ADI stock initially fell on the news but turned slightly positive.
The Wilmington, Mass.-based company earned an adjusted $2.49 a share on sales of $3.08 billion in the quarter ended July 29. Analysts polled by FactSet had predicted earnings of $2.52 a share on sales of $3.1 billion. On a year-over-year basis, earnings and sales both dropped 1%.
For the current quarter, Analog Devices forecast adjusted earnings of $2 a share on sales of $2.7 billion. Wall Street was looking for earnings of $2.40 a share on sales of $3.01 billion in the fiscal fourth quarter. In the year-earlier period, the chipmaker earned an adjusted $2.73 a share on sales of $3.25 billion.
"In a challenging operating environment, ADI executed well, and delivered third-quarter results within our expectations," Chief Executive Vincent Roche said in a news release. "However, the customer inventory adjustments we mentioned last quarter have accelerated as economic conditions deteriorate and our lead times continue to improve."
ADI Stock Seesaws After Report
In morning trades on the stock market today, ADI stock dropped as much as 4.6% before reversing. At the close, ADI stock gained 0.5% to close at 177.48.
Analog Devices makes radio frequency, power management and sensor semiconductors. Further, its chips are used in industrial, communications, automotive and consumer markets.
Growth in industrial and automotive chips helped to offset declines in communications and consumer device chips last quarter.
ADI stock has been volatile this year. It has experienced three failed breakouts in 2023, according to IBD MarketSmith charts.
Analog Devices ranks sixth out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. ADI stock also has an IBD Composite Rating of 79 out of 99.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
