This Little-Known Company Could Benefit From Apple For Years To Come

In a report published Monday, Barclays analyst Blayne Curtis upgraded shares of Analog Devices, Inc. (NASDAQ: ADI) to Overweight from Equal-weight with a price target raised to $70 from a previous $55 as the company has secured multiple sockets across Apple Inc. (NASDAQ: AAPL)'s iPhone and iPad lineup to enable the 3D/Force Touch feature.

According to Curtis, Apple needs and would be willing to pay for Analog Device's high accuracy converters. The analyst said that 3D-touch will start with the iPhone 6S and iPad in 2016, which will add at least $0.80 in incremental earnings per share for Analog Device in calendar 2016 with the tailwind extending into 2017.

"In short we believe Apple plans to extend "Force Touch" (launched with the Apple Watch and new MacBook) to the rest of its product line," Curtis wrote. "Analog Devices is known to have the best converters in the industry and this level of performance is needed to compensate for high levels of screen noise."

Curtis continued that longer-term, the potential exists for the converter enabling 3D touch to integrate the 2D touch function into a single "super chip," providing Analog Devices with a "multi-year roadmap" and the potential to "suck in" other content over time.

Bottom line, Analog Devices is well positioned beyond Apple as it will likely see an acceleration in Automotive where it can regain lost share in sensors. Furthermore, there exists potential for further revenue upside and cost savings from its 2014 acquisition of Hittite Microwave.

Shares of Analog Devices were up 5 percent in Monday's pre-market session.