Analog Devices remains top semi pick at Citi as firm keeps 'cautious' outlook on sector
sasirin pamai

Analog Devices (NASDAQ:ADI) is still the top semiconductor pick at Citi, even as the investment firm kept its "cautious" outlook on the sector in a new research report, citing October monthly sales.
Analyst Christopher Danely noted that the Semiconductor Industry Association reported $44B in monthly sales during October, down 10.9% month-over-month, below seasonal trends and Citi's own estimate of $46B. As a result of the lower-than-expected revenue, Danely lowered estimates for 2022 revenue again and now expects 2023 sales to drop 7% year-over-year to $538.5B, in large part to first-half weakness. 
"We remain cautious on semis due to inventory build and recession and reiterate [Analog Devices] as our top pick given our defensive nature," Danely wrote in a note to clients.
Analog Devices (ADI) fell nearly 1% to $167.00 in premarket trading on Monday.
Delving deeper, Danley noted that semiconductor unit growth in October was actually above seasonality, (down 6.8% month-over-month compared to average decline of 7.9%), due in part to growth for analog, microprocessor and microcontrollers. However, pricing continued to remain weak.
Danely added that when the downturn ends, investors should look to own Micron (MU), ON Semiconductor (ON), GlobalFoundries (GFS) and Advanced Micro Devices (AMD), as those companies "offer the most upside."
Late last month, Analog Devices (ADI) posted fourth-quarter results and guidance that topped expectations.