Shares of Analog Devices Inc. rose Tuesday after the chip maker forecast a 20 percent increase in revenue for the first quarter and higher-than-expected earnings as the economy gradually recovers.
The company also posted a strong fourth quarter, with a 16 percent growth in revenue from the prior quarter, said BMO Capital Markets analyst Ambrish Srivastava.
Late Monday, Analog Devices said it earned $105.6 million, or 36 cents per share, down from $143.9 million, or 49 cents per share, in the same period a year ago. Revenue dropped 13 percent to $571.6 million, but the company still beat analysts' forecasts.
Srivastava said the automotive segment was up 37 percent in the quarter from the prior quarter, helped by stimulus programs, while consumer sales rose 39 percent.
The analyst was also impressed by a decline in operating expenses in the quarter and an increase in gross margin that should continue throughout the fiscal year.
"The company continues to demonstrate the path to higher profitability," said Srivastava.
For the first quarter, Analog Devices said it expects earnings of 36 cents to 37 cents per share in the first quarter, excluding restructuring charges related to the closure of its fabrication facility in Cambridge. Analysts expect 28 cents per share.
Shares of Analog Devices, based in Norwood, Mass., rose 96 cents, or 3.4 percent, to $28.90 in premarket trading.