Sprawling semiconductor company Analog Devices (ADI 2.02%) notched a win on the stock exchange Friday, with its shares closing the trading session nearly 2% higher. It was one of two stocks flagged by a major bank as top picks in their sector, which the bank believes will thrive across this year. With that bump Analog Devices beat the S&P 500 index, which rose by barely over 1% today.
A top bank says Analog Devices is the top
That researcher was top-four U.S. bank Citigroup, which before market open published a new take on the present, and potential future, of the semiconductor industry.
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According to reports, the company waxed bullish on semiconductors despite recent (and quite notable) declines. It wrote that April sales for the industry were $55 billion, which was a decrease of more than 11% from March. It pointed out that double-digit drops are seasonal, however, and this one was not far away from its forecast of a 10% fall. Also, zooming out, April sales were 24% higher year over year.
In a more optimistic development, Citigroup wrote, average selling prices saw significantly less erosion than expected. In April they fell by 3.2% month over month, while the bank was anticipating a 5.3% drop.
Time to play defense
The environment for semiconductors should improve as the year wears on; Citigroup maintained its forecast of an 8% increase over 2024's level.
To take advantage of this, the bank believes that Analog Devices and its peer Texas Instruments are the best picks, as they are defensive stocks in a tough environment. I would buy that argument, particularly since Analog Devices has an admirably wide product range and as such has something of a natural hedge in its business.
