QS Research · Michael Burry's Scion Capital analyst template · 2006
ANALOG DEVICES INC (ADI)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -60% · downside -66% · upside -40%
Section 13's TTM base is peak-cycle, so I use its own mid-cycle EBITDA of ~$3.3B (midpoint revenue $10.87B x ~30% average margin) for all three cases; TTM EBITDA is $5.36B, about 1.9x the six-year average of ~$2.85B (S2, N14). At 23x the peer median that is ~$75.9B EV, less $5.16B net debt, or ~$146/share, -60% from $362.26; at 20x downside is ~$124 (-66%), and even at today's 33.7x on normalized EBITDA the upside is ~$219 (-40%) (S1, N21, N22, N23, N5, N1). The franchise and balance sheet are fine - Q3 FY2026 revenue rose 40% and FCF is $4.94B - but the price capitalises peak earnings at a premium multiple, so there is no margin of safety (S28, N18). I would short; conviction is medium because the 2026-11-24 print and record Q4 guide can squeeze a valuation call.
Key numbers
- Share price: $362.26
- Market cap: $175.54B
- Latest financial period: TTM to Aug 1, 2026
- Revenue (TTM): $13.88B
- EV / EBITDA (TTM): 33.7x
- P/E (TTM): 42.5x
- Price / book: 5.23x
The 15 boxes
- ✓ 1. Long-form business notes
ADI sells high-performance analog/mixed-signal, power and RF ICs — more than 75,000 SKUs in FY2025 versus more than 45,000 in FY2020 — split FY2025 by end market at Industrial 45%, Automotive 30%, Consumer 13%, Communications 13%, through a direct force plus distributors in roughly 50 countries with no long-term contracts. The cycle is visible in the XBRL record: revenue $12.31B (FY2023) to $9.43B (FY2024) to $11.02B (FY2025), operating income $3.82B to $2.03B to $2.93B. Cash generation stayed heavy through the trough — operating cash flow $4.81B in FY2025 against capex of $533.6M and D&A of $406.8M — which is why the business should be valued on mid-cycle earnings and cash flow, not a single year. Between the FY2020 and FY2025 business sections the narrative shifts from acquisition scale (Maxim proposed in FY2020, ~7,600 engineers) to the Intelligent Edge, AI and software platforms (~13,000 engineers, CodeFusion Studio 2.0 and Power Studio launched in FY2025).
- ✓ 2. Competitive advantage
The sources support a claimed competitive edge built on technical innovation in performance and reliability plus customer service and technical support, not on a single proprietary standard or price. They also show a highly competitive market where many rivals have comparable resources and where order terms and distributor dependence limit evidence of strong switching costs. The cycle data show operating profit and cash flow stayed positive through the FY2023-FY2024 downturn, but the sources do not quantify market share or margin percentages.
- ✓ 3. 10-Q takeaways
The Q3 FY2026 10-Q (quarter ended 2026-08-01) shows an up-cycle quarter: revenue $4,021.9 million, +40% Y/Y, gross margin 67.3% (+520 bps), and nine-month operating cash flow $3,844.5 million. Growth is broad but concentrated in Industrial (+53%) and Communications (+84%, AI data-center driven), with margins lifted by factory utilization and mix. Net income of $1,340.1 million (33.3% of revenue) is flattered by a one-off Penang subsidiary sale gain and a 13.3% tax rate versus 32.1% last year. Inventory and receivables are building with the cycle, debt is $9.2 billion with $1.3 billion reclassified to current, and the new risk item is the June 2026 cyber intrusion with file exfiltration still under investigation.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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