Sterne Agee Expects Another Strong Year For Analog Devices, Raises PT To $47

Sterne Agee has published a research report on Analog Devices ADI after the company report 1Q11 revenues and EPS slightly ahead of analyst expectations. In the report, Sterne Agee writes "We believe 2011 will be another strong year for ADI, driven by strength from its key Industrial, Automotive and Consumer customers. With industrial inventories at normal levels and an improving industrial and Manufacturing environment in Emerging countries, ADI and its key customers Siemens AG SI ($128.11, Buy - covered by Nick Heymann) and ABB Ltd. ABB ($22.82, Buy - covered by Nick Heymann) should benefit, in our view. A key driver within the Industrial market is Motor Energy Efficiency implemented with Analog circuits as almost 40% of all electricity is consumed by Industrial Motors. Another key market focus for ADI is healthcare given the sticky nature and solid margins in the segment. ADI should also see strength from the automotive segment as we go into Summer season, with typical analog content now almost $50/car. We believe ADI should also see traction with multiple tablets ramping in 1H11. On the Communication side, each transition to next generation such as 4G gives ADI higher dollar content of almost $10/channel with new power conversion and RF opportunities." Sterne Agee maintains its Buy rating and has raised the price target from $45 to $47. Analog Devices closed yesterday at $41.00.