Susquehanna Raises Price Target on Applied Materials (AMAT) Following 4Q

November 18, 2016 8:01 AM EST
Get Alerts AMAT Hot Sheet
Price: $31.44 +4.45%

Rating Summary:
    25 Buy, 3 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 31 | New: 42
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Susquehanna reiterated a Neutral rating on Applied Materials (NASDAQ: AMAT), and raised the price target to $27.00 (from $25.00), following the company's 4Q earnings report. AMAT reported revenues of $3.3B, in line with the consensus of $3.3B. Non-GAAP EPS of $0.66 was a penny above consensus of $0.65. AMAT guided Jan-Q revenue of $3.20B - $3.34B above prior consensus of $3.14B. 1Q Non-GAAP EPS guidance of $0.62 - $0.70, is above prior consensus of 0.59.

Analyst Mehdi Hosseini commented, "Although AMAT's report was just Ok(ish), guidance exceeded expectations and commentary on 2017 was pretty positive. The bulk of the conference call was focused on convincing the investment community that the industry is no longer cyclical, though we argue that at this juncture, the demand strength for AMAT's core SSG (Semi Cap) is pretty much driven by end market demand trends, with limited visibility beyond the Mar Q. In this context, and given our (vertically focused) coverage, we argue NAND spend will peak in 1H17 (as wafer capacity growth starts to diverge from bit growth) while 10nm foundry will be a smaller node and pretty much like 20nm. Multi-patterning is a key secular trend for AMAT and the like, but the escalating cost is a material factor weighing negatively on affordability of foundry demand at and below 10nm. All in all, AMAT is executing well and SCE and Display demand remains strong near term, driving up our estimates. The next catalyst (not discussed on the call) is what AMAT would do with the cash (on-shore ~45% of the current cash and 25% of future FCFs); we don't rule out smaller acquisitions (easier to approve) as AMAT strengthens its product portfolio against competitors, with dividend and buyback considered as the next priority for the use of cash."

For an analyst ratings summary and ratings history on Applied Materials click here. For more ratings news on Applied Materials click here.

Shares of Applied Materials closed at $30.73 yesterday.



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