ADI
Analog Devices, Inc.
$371.86
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 18.0% above fair value
You pay
$371.86
Bear
$199.42
Fair
$315.13
Bull
$442.42
Bear
$199.42
-46.4%
9% stage 1 growth, 11% discount
Fair
$315.13
-15.3%
14% stage 1 growth, 11% discount
Bull
$442.42
+19.0%
19% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
46.1x
Market is pricing in (growth)
20.1%
vs 14.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $454.76 from 54 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $315.13 per share.
Warnings
Wall Street's average price target is $454.76 (from 54 analysts). Our estimate is 47% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions