Analog Devices Issues Inaugural $750M Sustainability-Linked Bond

Semiconductor company Analog Devices Inc. (ADI) recently announced the issuance of its inaugural sustainability-linked bond amounting to $750 million in 7-year notes. This issuance is in line with the company’s aspirational ESG goals.

Analog Devices is one of the first technology firms in the U.S. to offer three sustainability-linked bond offerings, along with its inaugural green bond issuance of $400 million in April 2020 and refinancing of its revolving credit facility with a new $2.5 billion sustainability-linked revolving credit facility.

Notably, it aims to become carbon neutral by 2030 and achieve net-zero emissions by 2050 or sooner. Further, the company’s interest rate payments on its newly issued sustainability-linked bond depend on the achievement of its carbon-neutral goals.

The Chief Financial Officer of Analog Devices, Prashanth Mahendra-Rajah, said, “Our inaugural sustainability-linked bond further reinforces our commitment to environment sustainability, especially the reduction of greenhouse gas emissions, which will help enable the transition towards a low-carbon economy.” (See Analog Devices stock chart on TipRanks)

Recently, Jefferies analyst Mark Lipacis assigned a Buy rating to the stock. The analyst, however, raised the price target to $206 from $195, which implies upside potential of 24.6% from current levels.

After a recent meeting with the CFO of the company, the analyst said, “We left our meeting with the sense that ADI is tracking to its cost synergy goals ahead of its original schedule, and we think there is a good chance that they achieve Phase 1 – $275m of annual synergies before the end of F2023 (October 2023). ADI also noted that it expects the integration to go relatively smoother than LLTC due to a closer cultural fit of MXIM and ADI.”

Consensus among analysts is a Strong Buy based on 10 Buys and 3 Holds. The average Analog Devices price target of $192.08 implies upside potential of 16.2% from current levels.

Analog Devices scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained 43.1% over the past year.

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