ADI Likely to Beat Q3 Earnings Estimates: How to Play the Stock

Core Insights - Analog Devices, Inc. (ADI) is set to report its third-quarter fiscal 2025 results on August 20, with expected revenues of approximately $2.75 billion, reflecting a 19.2% increase year-over-year [1][9] - The anticipated adjusted earnings per share (EPS) is $1.92, indicating a 22.2% rise from the previous year's quarter, with a slight upward revision in estimates over the past 60 days [2] Revenue and Earnings Expectations - ADI's revenue forecast of $2.75 billion is within a range of +/- $100 million, while the Zacks Consensus Estimate stands at $2.76 billion [1] - The consensus for adjusted EPS is $1.93, with ADI having consistently surpassed earnings estimates in the last four quarters, averaging a surprise of 5.6% [2] Factors Influencing Q3 Performance - The third-quarter performance is expected to benefit from inventory normalization across direct and distribution channels, alongside improved bookings and lean inventory levels following the semiconductor industry's cyclical downturn [3] - Secular growth trends in industrial automation, healthcare, surgical robotics, automotive, AI infrastructure, and high-end consumer devices are anticipated to drive revenue growth [4] Challenges and Market Conditions - Despite positive growth factors, ADI faces macroeconomic challenges such as tariff-related uncertainties, geopolitical tensions, and inflationary pressures that may impact performance [5] Earnings Prediction Model - The earnings prediction model indicates a strong likelihood of an earnings beat for ADI, supported by a positive Earnings ESP of +0.72% and a Zacks Rank of 3 [6]