No one could ignore Analog Devices's price drop during evening trading session, as the stock fell to $196.59, logging a -3.0% underperformance of the S&P 500. The stock is still trading within range of its average target price of $203.4, which may prove to be a resistance point to further declines. Analysts have given the Semiconductors stock target prices ranging from 175.0 to 225.0 dollars per share, with an average rating of buy.
The market seems to share this rosy outlook, since Analog Devices has a short interest of only 1.4%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Analog Devices is to look at the percentage of institutions that are invested in the stock. In this case, 92.1% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is mixed market sentiment towards Analog Devices because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about ADI:
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It has trailing 12 month earnings per share (EPS) of $6.55 per share
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Analog Devices has a trailing 12 month Price to Earnings (P/E) ratio of 30.0 while the S&P 500 average is 15.97
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The company has a Price to Book (P/B) ratio of 2.74 in contrast to the S&P 500's average ratio of 2.95
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Analog Devices is a Technology company, and the sector average P/E and P/B ratios are 35.0 and 7.92 respectively
