On Friday, TD Cowen made adjustments to its outlook on Applied Materials (NASDAQ:AMAT) stock, lowering the price target from $225.00 to $220.00, while still maintaining a Buy rating for the company. The research firm’s analyst, Krish Sankar, provided insights into the rationale behind the change, noting the strength of Applied Materials’ broad portfolio in positioning the company for future technological inflection points. With a market capitalization of $133 billion and a prominent position in the Semiconductors industry, Applied Materials has demonstrated strong momentum, posting a 12.3% return in the past week. According to InvestingPro analysis, the stock’s RSI currently suggests overbought territory.
According to Sankar, Applied Materials’ recent financial results and guidance surpassed expectations on the earnings front, despite not outperforming revenue forecasts. The company has maintained solid financial performance with revenue of $28.09 billion and an impressive gross margin of 48.14%. The company’s front-end logic (F/L) segment has been robust, helping to balance slower activity in ICAPs and 200mm equipment areas. Furthermore, the analyst observed a decrease in revenue from China, which dropped to 25% from the previous quarter’s 31%. InvestingPro data reveals the company has maintained dividend payments for 21 consecutive years, with a current dividend yield of 1.05%.
Applied Materials appears to have been minimally affected by tariffs in the April and July quarters. Sankar highlighted the company’s solid product momentum across its offerings. Despite facing higher costs, Applied Materials reportedly possesses some pricing power that could mitigate these expenses, although the impact on end demand remains challenging to measure.
The analyst reiterated the Buy rating for Applied Materials, affirming confidence in the company’s market position and potential for growth, despite the slight adjustment to the price target. The firm’s analysis suggests that Applied Materials is well-equipped to navigate the current market environment and capitalize on future opportunities in the technology sector.
In other recent news, Applied Materials reported earnings per share (EPS) that exceeded consensus estimates for both the April and July quarters, with figures of $2.39 and $2.35, respectively. Revenue for the April quarter slightly missed expectations at $7.10 billion, while July’s revenue was in line at $7.2 billion. Analysts have responded to these results with various adjustments to their price targets. Cantor Fitzgerald maintained an Overweight rating with a $200 price target, highlighting strong gross margins and share buybacks. Citi raised its price target to $190, citing a favorable product and display gross margin mix, while JPMorgan reduced its target to $210, noting robust expenditure trends in advanced sectors but challenges in mature technologies. Evercore ISI adjusted its target to $209, emphasizing Applied Materials’ strategic positioning in key growth areas. Raymond James also revised its target to $200, maintaining an Outperform rating, and noted the company’s strong margin execution and potential benefits from secular trends. These developments reflect a diverse range of perspectives on Applied Materials’ financial performance and future outlook.
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