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Analysts at the firm believe the company may need some time to grow into its multiple.
“While we do expect the overall semiconductor market to grow in 2024, the industrial and Automotive semiconductor markets are unfortunately closer to the beginning of their corrections than the end, and these bastions of the analog industry are, in our opinion, unlikely to join in the fun,” analysts wrote.
At Bernstein, it was noted that among their coverage, ADI has seen the sharpest downward revision to its forward earnings estimates, with current consensus expectations down a third from their CY2023 peak. “In fact, ADI’s estimate revision was probably the most extreme among large-cap semis,” said analysts.
“ADI’s multiple sits in the high 20’s, and while ADI is a high-quality company that tends to command a premium this is admittedly elevated,” they added.
