Analog Devices Leads Semiconductor Stocks to Four-Month High

(Bloomberg) -- Semiconductor stocks rose to the highest in four months after a strong forecast from Analog Devices boosted optimism that the worst may be over for the nearly $500 billion industry.

The Philadelphia semiconductor index gained as much as 1.5 percent on Wednesday, rising to the highest since October 3. Analog Devices led the benchmark with a 3.9 percent gain, as investors cheered a $1.5 billion fiscal second-quarter revenue forecast that met expectations amid an earnings season marred by misses.

"In-line guidance is clearly better than most other December quarter semi reports," Raymond James analyst Chris Caso wrote in a research note following the earnings report.

Chipmakers have rebounded after broad-based demand weakness caused semiconductor stocks to tumble at the end of 2018. The Philadelphia semiconductor index has gained 28 percent from a December 24 low and is now just 6 percent from the benchmark’s March record.

On the earnings call, Analog Devices said orders have improved in the first few weeks of the quarter and inventories are in line with historical norms, Bloomberg Intelligence analyst Woo Jin Ho said in an interview.

Analog Devices benefited from strong sales in the communications market in a "challenging macroeconomic environment," Chief Executive Officer Vincent Roche said in the earnings statement. The Norwood, Massachusetts-based company has a market value of about $40 billion.

To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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