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Analog Devices, Inc. (ADI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Analog Devices, Inc. (ADI)

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Intrinsic Value (DCF)

Current$302.10
→
Intrinsic$212.00
-30%
$137.98$212.00$359.24
Market implies 24% growth for 5 years
ADI trades at a premium to our conservative estimate — investors expect above-average performance.
At $302, the market prices in continued strong cash flow growth (24%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $138 → Bull $359. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →11%13%15%17%
8%$266$291$317$345
10%$179$195$212$230
12%$132$144$157$170
14%$103$113$123$133

Bull Case

  • Bull case ($359) offers 19% upside at 18% growth, 8% discount

Bear Case

  • Bear case ($138) implies 54% downside at 12% growth, 12% discount
  • Price reflects 24% growth expectations vs 15% historical — high bar to clear
  • Trading 30% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$4.92B
Year 2$5.66B
Year 3$6.51B
Year 4$7.48B
Year 5$8.61B
Terminal$136.37B

📐 Model Inputs

Growth Rate15.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$4.28BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ADI stock undervalued or overvalued?
🔴 OVERVALUED

ADI trades at $302.10 vs. our DCF-derived intrinsic value of $212.00, implying -28% downside. Using a 9.5% WACC and 15.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($320.49) suggests limited upside.

What is ADI's intrinsic value?

Using a 5-year DCF model: Base FCF of $4.28B, projected at 15.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $6.17B net debt and dividing by 0.50B shares: Bear $137.98 | Base $212.00 | Bull $320.49. Current price $302.10 implies -28% to base case.

How is ADI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 15.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($111.47B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.