ADI
Analog Devices, Inc.
$397.07
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 28.8% above fair value
You pay
$397.07
Bear
$195.12
Fair
$308.34
Bull
$432.88
Bear
$195.12
-50.9%
9% stage 1 growth, 11% discount
Fair
$308.34
-22.3%
14% stage 1 growth, 11% discount
Bull
$432.88
+9.0%
19% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
49.1x
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 $435.35 from 54 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $308.34 per share.
Warnings
Wall Street's average price target is $435.35 (from 54 analysts). Our estimate is 45% 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