Seeking Alpha

Wells Fargo's ADI downgrade: sales uncertainty, valuation cited

  • Wells Fargo's David Wong, who downgraded Analog Devices (ADI -3.2%) to Market Perform this morning, is concerned the soft December quarter guidance provided by many chip companies "creates uncertainty" for early 2014 guidance.
  • He also thinks expectations for improving chip industry fundamentals are largely priced into ADI's shares, along with those of many peers. ADI currently trades at 15x estimated FY14 (ends Oct. '14) EPS excluding net cash/investments.
  • Shares sold off in November after the company provided soft January quarter guidance, while blaming seasonal weakness.
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