Cowen Boosts PT on Applied Materials (AMAT) to $33 Following Q4 Report, Outlook

November 18, 2016 6:12 AM EST
Get Alerts AMAT Hot Sheet
Price: $33.84 +0.27%

Rating Summary:
    24 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Cowen and Company lifts its price target on Outperform-rated Applied Materials (Nasdaq: AMAT) from $32.50 to $33 following Q4 results released Thursday night.

The firm commented today: While orders for both display and SSG were down as expected, the outlook here is very strong and AMAT is executing very well. Recent pull-ins that have made CQ4 better across the board are having no impact on C2017 with AMAT expressing even more confidence in a strong WFE year (potentially as high as $35B) where it again gains share (we estimate it gained an amazing ~300bps share in C2016). This is really before a host of huge China projects start to really take off (more '18). We have long argued that higher capital intensity has put a higher "floor" into WFE with investment now much more about technology than capacity. While we do see WFE "run-rate" exiting the year a good bit above the $35B level and shipments have probably reached a near-term peak, shipments are also unlikely come off much given another strong 3D NAND year and the 7nm foundry/logic wave just starting to build. Lastly, there are a number of new silicon-hungry applications requiring dramatically more compute complexity (AR/VR, AI and autonomous vehicles) and this should absolutely benefit AMAT. Ultimately, more sustainable performance argues for a better multiple – something that has yet to materialize vs. semis peers whose models are largely tapped out in terms of elements of surprise.

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