02:25 PM EDT, 08/21/2024 (MT Newswires) -- Analog Devices ( ADI ) guided for a sequential improvement in fiscal fourth-quarter results on Wednesday after performing better than expected in the third quarter.

The chipmaker expects revenue of $2.4 billion in the ongoing quarter, plus or minus $100 million. It sees adjusted earnings per share of $1.63, plus or minus $0.10. Analysts on average are modeling for revenue of $2.38 billion and normalized EPS $1.62 in the fourth quarter.

While the guidance implies a year-over-year decline from the $2.72 billion in revenue and $2.01 in adjusted EPS Analog Devices reported for the same quarter of fiscal 2023, it signals a quarter-over-quarter improvement. The company's shares rose 3% in afternoon trade.

"Improved customer inventory levels and order momentum, across most of our markets, position us to grow again sequentially in our fourth quarter, increasing our confidence that we are past the trough of this cycle," Chief Financial Officer Richard Puccio said in a statement. "However, economic and geopolitical uncertainty continues to limit the pace of the recovery."

For the third quarter, revenue fell to $2.31 billion from $3.08 billion the year prior but surpassed the $2.27 billion average analyst estimate on Capital IQ. Adjusted earnings per share slid to $1.58 for the three months ended Aug. 3 from $2.49 the year earlier but beat the Street's $1.51 view.

The favorable results increased Chief Executive Vincent Roche's confidence that "the cyclical bottom for ADI" was reached in the second quarter, he told analysts on a conference call, according to a Capital IQ transcript. Still, as macro challenges limit a sharper recovery, the company is focused on balancing near-term fiscal discipline with strategic investments, he said.

In Analog Device's industrial end market, its largest and most profitable business, the company sees "tremendous long-term growth opportunities," Roche said. The company sees "a path to double-digit revenue growth" in aerospace and defense in 2025, he said.

Automation has been slower to recover but is well-positioned as clients discover the "benefits of increased productivity," Roche told analysts.

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