Analog Devices Stock: Comeback In The Cards

Analog Devices Inc. stock (NASDAQ: ADI) is down around 7% in the past month (21 trading days), underperforming the S&P 500 which was roughly unchanged over this period. If you look at the change over the last five and ten days, too, the stock has returned -4% and -7.5%, respectively, underperforming the broader market on both occasions. This comes as a surprise after ADI reported strong FY ’21 earnings in late November (ADI’s fiscal year ends in October), with revenue at $7.32 billion, up strongly from $5.6 billion in FY ’20. However, operating expenses grew at a faster rate than the growth in revenue, leading to operating margins dropping from 26.7% in FY ’20 to 23.1% in FY ’21. A $215 million loss on debt extinguishment was somewhat outweighed by a $62 million tax benefit (vs a $91 million tax expense), and EPS came in marginally higher at $3.50 vs $3.31 in FY ’20. For details on Analog Devices historical revenue and margin growth along with comparison to that of its peers, see Analog Devices Inc. Revenue Comparison.

Now, is ADI stock set to continue its underperformance or could we expect a rally? We believe that there is a strong 77% chance of a rise in Analog Devices stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on ADI Stock Chance of Rise. For additional details about ADI historical returns and comparison to peers, see Analog Devices Stock Return.

Twenty-One Day: ADI -7.1%, vs. S&P500 0.03%; Underperformed market

(7% likelihood event; 77% probability of rise over next 21 days)

• ADI stock dropped 7.1% the last twenty-one trading days (one month), compared to a broader market (S&P500) marginal rise of 0.03%
• A change of -7.1% or more over twenty-one trading days is a 7% likelihood event, which has occurred 177 times out of 2515 in the last ten years
• Of these 177 instances, the stock has seen a positive movement over the next twenty-one trading days on 137 occasions
• This points to a 77% probability for the stock rising over the next twenty-one trading days

Ten Day: ADI -7.5%, vs. S&P500 -0.4%; Underperformed market

(3% likelihood event; 58% probability of rise over next 10 days)

• ADI stock dropped 7.5% over the last ten trading days (two weeks), compared to a broader market (S&P500) drop of 0.4%
• A change of -7.5% or more over ten trading days is a 3% likelihood event, which has occurred 78 times out of 2516 in the last ten years
• Of these 78 instances, the stock has seen a positive movement over the next ten trading days on 45 occasions
• This points to a 58% probability for the stock rising over the next ten trading days

Five Day: ADI -4%, vs. S&P500 -0.6%; Underperformed market

(9% likelihood event; 60% probability of rise over next five days)

• ADI stock dropped 4% over a five-day trading period ending 12/22/2021, compared to the broader market (S&P500) drop of 0.6%
• A change of -4% or more over five trading days (one week) is a 9% likelihood event, which has occurred 218 times out of 2516 in the last ten years
• Of these 218 instances, the stock has seen a positive movement over the next five trading days on 130 occasions
• This points to a 60% probability for the stock rising over the next five trading days

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