Applied Materials (AMAT) $3 In EPS Could Be On The Table - Cowen

Cowen analyst, Timothy Arcuri, thinks Applied Materials (NASDAQ: AMAT) could offer a scenario that would bring the company to a $3 EPS number at the analyst meeting in Sept. PT rises to $26 from $24, no change to Outperform rating.

The better than expected order number shifts the question to sustainability. Guidance does suggest orders may moderate slightly from these lofty levels but a reset seems unlikely as OLED vectors are very strong and the concentrated TSMC 10nm ramp is still actually on the come for AMAT. This should be a watershed Q as the Street has been generally skeptical of its ability to re-produce the ~$2+ EPS that was dreamable under a TEL merger scenario. Now, AMAT could lay out a $2.50 or even $3/sh EPS scenario at its analyst meeting in September given four factors: 1) OLED vectors (AAPL + TV ramp + SAM expansion), 2) China semis (should add ~$2-3B/yr to WFE and add ballast), 3) foundry mix shift (10/7nm is a lot more exciting/economically attractive than 20/16nm), and 4) Samsung capex trajectory (currently think semis capex is down >50% this year, likely to snap back in '17).

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 $19.91 yesterday.

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