Analog Devices (NASDAQ:ADI) stock got a much-needed boost earlier this year after a terrific third-quarter report put to rest rumors about the loss of its Apple (NASDAQ:AAPL) contract. The chipmaker beat Wall Street's earnings forecasts and issued stronger-than-expected guidance in late August, and this helped catapult the stock price to 52-week highs.

Analog Devices investors will be looking forward to a new set of catalysts when it releases its fiscal fourth-quarter results on Nov. 21. But can the company deliver once again?

Abstract image of an integrated circuit.

Image Source: Getty Images

Why Analog will beat expectations

Analysts expect Analog Devices' top line to jump almost 50% year over year to $1.5 billion, boosting its earnings from $1.05 per share in the year-ago period to $1.36 per share this time. However, it won't be surprising if the chipmaker manages to exceed expectations and its own guidance thanks to a bunch of strong catalysts.

Apple, for instance, could significantly boost Analog's top line as it has retained the 3D Touch feature across all of its latest iPhones. Analog supplies the technology that helps Apple bring this feature to life. In fact, Analog reportedly gets 13% of its total revenue by supplying these chips to Apple, so it wasn't surprising to see the chipmaker in trouble when rumors about Apple eliminating the feature in this year's iPhones started circulating.

But this isn't the case anymore. Apple's production ramp-up of its iPhone models could help Analog deliver a beat as its fourth quarter runs from August to October. According to supply chain reports, Apple had begun ramping up iPhone production last month, boosting iPhone X production by four times to 400,000 units a week.

On the other hand, the production of the iPhone 8 models was reportedly boosted in August ahead of the September launch. As a result of strong production numbers, Apple didn't just beat expectations for the September quarter, but also released a terrific guidance for the current one, putting manufacturing concerns to rest.

This sets the stage for Analog to issue a strong guidance once again as iPhone production is set to hit a higher gear in the December quarter. For instance, TrendForce believes that iPhone X production could hit 27 million units this quarter (around 2.25 million units a week), and keep rising going into the new year.

More importantly, Analog's iPhone-related gains will be augmented by a potential increase in the amount of money it makes from each device. This is because the 3D Touch module for the new OLED-based iPhone X is reportedly costing around 60% more than what Cupertino paid for last year's models.

Not surprisingly, Analog's consumer revenue had shot up 36% year over year during the third quarter as it benefited from the iPhone production ramp and richer content. So, it won't be surprising if Analog smashes it out of the park once again.

The way ahead

There's no doubt that Apple will be a critical factor driving Analog's results and outlook, but there are a variety of catalysts that could power its growth in the long run. For example, the chipmaker's automotive business has started gaining critical mass ever since it closed the acquisition of Linear Technology in March this year.

Analog Devices' automotive revenue had jumped 25% on a sequential basis during the third quarter, while the year over year jump was even stronger at 69%. This makes it evident that the Linear Tech acquisition has opened the floodgates for Analog to attack the automotive opportunity.

In fact, Analog Devices believes that its addressable automotive market could increase rapidly in the coming years, driven by a two-fold jump in semiconductor content to $500 per vehicle that puts its revenue opportunity at $3 billion. In perspective, Analog and Linear are just scratching the surface as they pulled in combined automotive revenue of $900 million last year.

Therefore, Analog Devices' automotive revenue is in for a massive jump once again this time as the integration of Linear Technology continues. More importantly, the chipmaker is targeting fast-growing niches within the automotive space to augment growth, such as battery management systems (BMS) for electric vehicles (EVs).

Analog's BMS platform is capable of enhancing the driving range and battery life of EVs, and the company is busy pushing the envelope in this space by developing a wireless solution. This will help the chipmaker extend its lead over rivals in this space, helping it achieve its ambition of doubling its chip content in EVs in the future.

Therefore, Analog Devices is on track to deliver a strong quarterly report and follow up the same with a robust guidance. This is good news for investors.