BofA/Merrill Lynch Upgrades Applied Materials (AMAT) to Buy

BofA/Merrill Lynch upgraded Applied Materials (NASDAQ: AMAT) from Neutral to Buy with a price target of $25.00 (from $25.00).

Analyst Krish Sankar said the recent sell off provides a very attractive buying opportunity. The analyst cited three reasons for the upgrade: "(1) while we remain bullish on the semicap cycle, AMAT is more of a restructuring story, making it cycle-agnostic in the intermediate term and not as susceptible to the noise around demand/yield. (2) We do expect the merger with Tokyo Electron (TEL) to close (timing could be C1Q15) & est combined ‘normalized’ earnings power in a $31B wafer fab equipment (WFE) spend to be $1.80 implying the stock is trading at a very attractive 10-11x normalized EPS, and (3) in the unlikely scenario the deal breaks, we expect AMAT would trade down to $17-18 (~13x CY15E stand-alone EPS), i.e. limited downside with upside to our PO of $25."

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 $19.34 yesterday.

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