Chipmaker Analog Devices on Wednesday beat Wall Street's targets for its fiscal second quarter and guided higher than views for the current period. ADI stock rose on the news.
The Wilmington, Mass.-based company earned an adjusted $1.40 a share on sales of $2.16 billion in the quarter ended May 4. Analysts polled by FactSet had expected earnings of $1.26 a share on sales of $2.11 billion. However, on a year-over-year basis, Analog Devices earnings fell 51% while sales declined 34%.
Analog Devices' fiscal Q2 report marked its fourth straight quarter of declining sales and earnings as it navigates a cyclical downturn in demand. Analysts predict the declines will continue for three more quarters.
For the current quarter, Analog Devices forecast adjusted earnings of $1.50 a share on sales of $2.27 billion. That's based on the midpoint of its guidance. Wall Street was modeling adjusted earnings of $1.34 a share on sales of $2.16 billion in the fiscal third quarter.
ADI Stock Jumps After Q2 Report
On the stock market today, ADI stock surged 10.9% to close at 240.16. In intraday trading, it notched a record high of 240.35.
"ADI delivered second-quarter revenue above the midpoint of our outlook, despite continued macro and inventory headwinds," Chief Executive Vincent Roche said in a news release.
He added, "We believe inventory rationalization across our broad customer base is stabilizing, clearing a path for us to return to sequential growth in the third quarter. This, coupled with improving new orders, gives us optimism that we are at the beginning of a cyclical recovery."
Analog Devices makes radio frequency, power management and sensor semiconductors. Its chips are used in industrial, communications, automotive and consumer markets.
In fiscal Q2, industrial chip sales accounted for 47% of the company's revenue. Automotive was the second largest segment at 30% of sales.
ADI stock ranks seventh out of 33 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup.
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