Analog Devices Stock To $195?
Analog Devices (ADI) stock has jumped 21% during the past month, and is currently trading at $277.26. Our multi-factor assessment suggests that it may be time to reduce exposure to ADI stock. We are primarily concerned current valuation and a price of $195 may not be out of reach. We believe there is not much to fear in ADI stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very High |
| What you get: | |
| Growth | Inconsistent |
| Profitability | Strong |
| Financial Stability | Strong |
| Downturn Resilience | Strong |
| Operating Performance | Strong |
| Stock Opinion | Relatively Expensive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $137 Bil in market cap, Analog Devices provides data converters, high-performance amplifiers, and RF/microwave ICs to support signal processing and cellular infrastructure across industrial, automotive, consumer, aerospace, and communications markets.
[1] Valuation Looks Very High
| ADI | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 11.4 | 3.2 |
| Price-to-Earnings Ratio | 60.2 | 23.5 |
| Price-to-Free Cash Flow Ratio | 32.1 | 20.5 |
This table highlights how ADI is valued vs broader market. For more details see: ADI Valuation Ratios
[2] Growth Is Inconsistent
- Analog Devices has seen its top line shrink at an average rate of -0.6% over the last 3 years
- Its revenues have grown 7.1% from $9.7 Bil to $10 Bil in the last 12 months
- Also, its quarterly revenues grew 24.6% to $2.9 Bil in the most recent quarter from $2.3 Bil a year ago.
| ADI | S&P 500 | |
|---|---|---|
| 3-Year Average | -0.6% | 5.5% |
| Latest Twelve Months* | 7.1% | 6.1% |
| Most Recent Quarter (YoY)* | 24.6% | 7.1% |
This table highlights how ADI is growing vs broader market. For more details see: ADI Revenue Comparison
[3] Profitability Appears Strong
- ADI last 12 month operating income was $2.6 Bil representing operating margin of 25.3%
- With cash flow margin of 40.1%, it generated nearly $4.2 Bil in operating cash flow over this period
- For the same period, ADI generated nearly $2.0 Bil in net income, suggesting net margin of about 18.8%
| ADI | S&P 500 | |
|---|---|---|
| Current Operating Margin | 25.3% | 18.8% |
| Current OCF Margin | 40.1% | 20.5% |
| Current Net Income Margin | 18.8% | 13.1% |
This table highlights how ADI profitability vs broader market. For more details see: ADI Operating Income Comparison
[4] Financial Stability Looks Strong
- ADI Debt was $8.7 Bil at the end of the most recent quarter, while its current Market Cap is $137 Bil. This implies Debt-to-Equity Ratio of 7.4%
- ADI Cash (including cash equivalents) makes up $3.5 Bil of $48 Bil in total Assets. This yields a Cash-to-Assets Ratio of 7.2%
| ADI | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 7.4% | 20.4% |
| Current Cash-to-Assets Ratio | 7.2% | 7.0% |
[5] Downturn Resilience Is Strong
ADI has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- ADI stock fell 27.6% from a high of $188.80 on 19 November 2021 to $136.73 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 February 2023
- Since then, the stock increased to a high of $278.24 on 3 December 2025 , and currently trades at $277.26
| ADI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -27.6% | -25.4% |
| Time to Full Recovery | 124 days | 464 days |
2020 Covid Pandemic
- ADI stock fell 34.0% from a high of $124.55 on 20 February 2020 to $82.23 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 June 2020
| ADI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -34.0% | -33.9% |
| Time to Full Recovery | 79 days | 148 days |
2008 Global Financial Crisis
- ADI stock fell 60.3% from a high of $40.56 on 9 May 2007 to $16.10 on 1 December 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 11 February 2011
| ADI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -60.3% | -56.8% |
| Time to Full Recovery | 802 days | 1480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ADI Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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