Billion-Dollar Buyout Drags Analog Devices Stock

The equity is just above its year-to-date breakeven mark

Digital Content Manager
Jul 13, 2020 at 10:16 AM
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The shares of Analog Devices, Inc. (NASDAQ: ADIare down 3.1% at $120.70 at last check, after the semiconductor maker said it would buy competitor Maxim Integrated Products (MXIM) for roughly $21 billion -- the largest U.S. deal this year. The purchase will boost ADI's market share in automotive and 5G chip-making, so that it can compete with larger rivals such as Texas Instruments (TXN). Analog Devices also raised its fiscal third-quarter guidance. As a result, the security earned a price-target hike from Raymond James to $140 from $125, this morning.

On the charts, ADI has swiftly recovered from its mid-March lows near the $79 level, hitting an all-time high of $127.39 on June 5. Since then, shares have found overhead pressure at the $125 mark, though the stock's 30-day moving average has served as a backbone since April, and today's drop has the equity pulling back to its level of support.

Analysts were majorly optimistic toward the equity coming into today. Of the 17 in coverage, 14 call it a "buy" or better, while only three carry a tepid "hold" recommendation.

Lastly, it looks as if calls are nearly doubling puts. In the past 10 days, 438 calls were exchanged, as opposed to 262 puts. What's more, albeit amid light absolute volume, Analog Devices' stock Schaeffer's open interest ratio (SOIR) of 0.34 stands higher than just 13% of readings from the past year, implying short-term options traders have been more call-biased than usual as of late.


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