) to neutral from outperform.
Analyst Louis Gerhardy says business conditions for ADI appear to be softer than expected. He attributes these changes to the deceleration in the global economy and inventory woes in certain vertical markets.
Gerhardy cut his $2.45 fiscal 2001 (Oct.) EPS estimate to $2.20 and his revenue estimate for the fiscal year by 5%. He notes the stock is trading at roughly a 25% premium to his 20% long-term growth estimate for the company. While ADI seems inexpensive, according to the analyst, its valuation parameters have been lower historically. Also, with what he believes is an ongoing contraction in fundamentals, Gerhardy thinks a sustainable near- to long-term rally in the stock is unlikely.