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Analog Devices (ADI) Surges 5%: Is This an Indication of Further Gains?

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Analog Devices (ADI - Free Report) shares rallied 5% in the last trading session to close at $153.12. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.6% loss over the past four weeks.

Analog Devices extended its rally, driven by the latest material revision made by the Bernstein analyst Stacy Rasgon, who upgraded the company’s shares from ‘Market Perform’ to ‘Outperform’. This is primarily attributed to the solid near term growth prospects in the company’s business in the communication end-market. Further, the company’s upside potential in the electric vehicle space remains a major positive. Furthermore, optimism related to Analog Devices’ Maxim deal  is a tailwind.

Additionally, the company’s better than expected performance in the second-quarter fiscal 2021 owing to solid momentum across industrial and automotive markets, remains noteworthy.

Price and Consensus

Price Consensus Chart for ADI

This semiconductor maker is expected to post quarterly earnings of $1.45 per share in its upcoming report, which represents a year-over-year change of +34.3%. Revenues are expected to be $1.6 billion, up 21.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Analog Devices, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ADI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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