Trade of the Day: Time to Book Profits in ADI Stock?

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Analog Devices, Inc. (NASDAQ:ADI) — This semiconductor company manufactures high-performance integrated circuits used in analog and digital signal processing applications.

On Feb. 23, I recommended traders buy ADI stock on a pullback to $57.50 with a trading target of $65. The stock hit a low of $57.45 on March 6, followed by a low of $56.27 on March 26. From there, ADI stock reversed on huge volume from just below its 50-day moving average.

With my trading target exceeded, those who followed my advice are looking at a more than 18% profit in just over three months.

S&P Capital IQ maintains its “sell” recommendation on ADI stock, but its analysts recently increased their 12-month target by $4 to $60. They noted improvements in the company’s outlook but stressed that growth appears to be decelerating due to sluggish demand in the communications business. They view ADI stock as “overvalued” at current levels.

Even though Credit Suisse Group AG (ADR) (NYSE:CS) maintains an “outperform” rating on ADI stock, its analysts’ target price of $65 has been achieved.

Technically, ADI stock is still trading in a powerful bull channel. Traders who strictly follow technical trends may want to hold the stock pending further developments. For them, a trailing stop-loss order of 5%, which would protect a profit through a decline to $64.50, may be appropriate.

A trailing stop would accept some downside risk but be able to achieve additional gains if ADI continues to power higher and break through Thursday’s high of $68.75.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/analog-devices-inc-adi-stock-trade-of-the-day/.

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