Analog Devices (NASDAQ: ADI) is looking good today and is notably avoiding the tech sector sell-off with its stock tracking higher after the company reported Q2 (Apr) results this morning. The maker of converter chips, which translate analog signals to digital signals and vice versa, reported EPS and revenue above the high end of prior guidance. Also, the mid-points of EPS and revenue guidance for Q3 (Jul) were both above consensus.
What was so special about this quarter?
Automotive experienced robust 42% growth yr/yr. ADI’s Automotive segment centers around Cabin Electronics, which involve active noise cancellation tech, premium audio, and other products.
In its Industrial segment, ADI was lapping a weak year-ago result, which led to 36% yr/yr and 13.6% sequential growth this quarter. We see this as a bullish signal that industrial customers are willing to spend again on automation and robotics.
ADI’s Consumer segment, which is comprised of the company’s hearables, wearables, and home entertainment categories, grew just 8% yr/yr. However, because Consumer is its smallest segment, it had little impact on the overall results. Given the relatively long use-life of the products within this segment, the weaker growth is not too surprising and mainly further diversifies the company’s revenue stream.
Another positive in the quarter was that the ban on sales to Huawei turned out to not be that big of a deal. ADI chips are used in radio systems for 5G networks. Communication segment revenue was flat, but that’s generally in-line with its laggard results of late. However, ADI expects 5G deployments to increase in the second half of this year. Analog Devices is looking good today after reporting positive Q2 (Apr) earnings (ADI)
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Anthony Gonzales brings 3 years of experience in helping grassroots, mid-sized organizations and large institutions strengthen their management and resource generating capacities and effectively plan for the future. He is also a mentor and professional advisor to artists working in all disciplines. He is the gold medalist from St. Marco University of Science and Technology in the Bachelors of Financial Management as well.