Analog Devices reiterated buy at UBS, as semiconductor cycle 'has legs'
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Analog Devices (NASDAQ:ADI), which is UBS's top pick for 2022, is being reiterated buy at the investment firm as recent data points suggests that the semiconductor cycle "has legs."
Analyst Pradeep Ramani notes that after speaking with distributors, he found that Analog's semiconductors have "stretched" lead times, though automotive and industrial end markets have shown improvements from the third-quarter to the fourth-quarter.

"Although downstream inventories are growing, we see a gradual transition to the inventory build phase as Analog vendors tightly manage supply allocations and Auto/Industrial production rebounds in C2022," Ramani wrote in a note to investors. "Net, we see supply chasing demand deep into 2022 creating a favorable backdrop for Analog/MCU pricing. We reiterate Buy on ADI on account of growth vectors, pricing power, MXIM synergy potential and capital return strategy."
Analog Devices (ADI) shares were flat in early Friday morning and have gained more than 11% over the past year.
Ramani noted that microcontroller lead times are still "stretched," at 50-52 weeks, though that has seen some improvement from the third-quarter, when they were more than 52 weeks. Analog Devices (ADI) has "largely stable" lead times, and though downstream inventory is growing, "chip inventory at tier-1 auto suppliers remains below pre-COVID levels as Analog vendors tightly control allocation."
On Thursday, Bank of America said Analog Devices (ADI) and On Semiconductor (NASDAQ:ON)
provided "reassuring updates" at the Consumer Electronics Show, giving bullish outlooks.