01:03 PM EDT, 05/23/2024 (MT Newswires) -- Analog Devices ( ADI ) is heading for a recovery after managing the downcycle well with a stronger than expected fiscal Q3 outlook, Morgan Stanley said in a note.

"The company has excelled in managing the downcycle and remains our preferred name as we enter an analog upcycle," Morgan Stanley said in the report.

Among the reasons for optimism were improving bookings in all markets, rising sell-through in Q3 from Q2, and decreasing channel inventory, according to the report.

"The company validated our June quarter inflection thesis and has given reason to be encouraged that we should start thinking about the strength of the recovery from here," the report said.

After the results, Morgan Stanley revised its estimates for 2024 to $9.382 billion with a margin of 68% and EPS of $6.40, compared with $9.035 billion, 68.2%, and $5.70 previously.

Morgan Stanley raised its price target on the stock to $260 from $221 while keeping its overweight rating.

Price: 236.63, Change: -3.53, Percent Change: -1.47