Analog Devices, Texas Instruments upgraded as tariff concerns wane: Seaport

Analog Devices (NASDAQ:ADI) and Texas Instruments (NASDAQ:TXN) were both upgraded to Neutral from Sell by Seaport Research Partners, due in part to waning concerns over tariffs.

“We previously put Sell ratings on ADI and TXN when the first round of the US government tariffs were rolling out,” said Seaport senior analyst Jay Goldberg in a Monday investor note. “At that time, it looked like the US was heading for a recession and reciprocal tariffs in other countries would crimp the analog semis cycle. Things did not play out that way.”

However, while the situation is not worsening, there are also no near-term apparent catalysts.

“While we see no strong catalysts, it now appears conditions will not deteriorate and inventories may start to improve,” Goldberg added. “Market risk appetite has also grown considerably … Confusing the situation, we still see few signs of demand growth. Analog stocks do best during the turnaround in inventory cycles, from bottom to recovery. Demand signals in most end markets remain very muted, albeit no longer deteriorating as they were last year. The analog environment may be doing better than we expected, but it is not particularly strong.”

Analog Devices and Texas Instruments shares increased marginally during early trading on Monday. These two stocks are up 14% and 15%, respectively, year to date. That is in line with the semiconductor sector as a whole. The Philadelphia Semiconductor Index (SOX) has increased 15% year to date.

Texas Instruments is slated to release its second quarter financial results after the markets close on Tuesday, July 22. A consensus estimate calls for adjusted earnings per share of $1.37 on revenue of $4.31B.