Analog Devices(US:ADI) Haitong Securities International·2025-08-21 07:08Investment Rating - The report assigns an "Outperform" rating for Analog Devices, indicating an expected total return over the next 12-18 months that exceeds the relevant market benchmark [18]. Core Insights - Analog Devices reported record performance for FY2025 Q3, with revenue of $2.88 billion, a 25% year-over-year increase and a 9% quarter-over-quarter increase. Adjusted EPS reached $2.05, surpassing market expectations [1][6]. - The industrial recovery and AI-related demand were identified as the primary growth drivers, with the industrial segment accounting for 45% of total revenue, growing 12% QoQ and 23% YoY [2][7]. - The automotive segment represented 30% of revenue, showing a 22% YoY increase but a slight 1% decline QoQ. Management anticipates short-term revenue disruptions due to order pull-ins and tariff impacts, but long-term growth is expected in high-value areas [8][10]. Summary by Sections Financial Performance - For FY2025 Q3, Analog Devices achieved a non-GAAP gross margin of 69.2% and an operating margin of 42.2%. The GAAP gross margin was 62.1%, with a GAAP EPS of $1.04. The company generated $4.2 billion in operating cash flow over the past 12 months, with free cash flow of $3.68 billion, representing 35% of revenue [1][6]. Revenue Segmentation - The core industrial and automotive businesses generated $2.136 billion, accounting for 74% of total revenue, with respective YoY growth rates of 23% and 22%. The communications and consumer segments also performed well, with YoY growth of 40% and 21% [1][6]. Market Outlook - Management provided guidance for FY4Q25, projecting a revenue midpoint of $3.0 billion, with an adjusted operating margin of approximately 43.5% and an adjusted EPS midpoint of $2.22. Continued growth is expected in the industrial, communications, and consumer segments, while the automotive segment may see a decline [10].