UPDATE: JPMorgan Upgrades Applied Materials (AMAT) to Overweight

July 7, 2014 6:39 AM EDT
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Price: $119.48 +3.83%

Rating Summary:
    25 Buy, 8 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 11 | Down: 19 | New: 11
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(Updated - July 7, 2014 10:05 AM EDT)

JPMorgan upgraded Applied Materials (NASDAQ: AMAT) from Neutral to Overweight with a price target of $30.00 (from $19.00). Analyst Harlan Sur noted continued WFE spending momentum.

"We are upgrading Applied Materials to Overweight (from Neutral) with a $30 Dec-2015 price target driven by its solid position in the semiconductor equipment market (deposition/etch/epi/implant), our continued positive outlook on the current Moore’s Law–driven wafer equipment (WFE) spending cycle, and improving confidence in the successful completion of the merger with Tokyo Electron (TEL – covered by J.P. Morgan Electronics/Precision & Industrial analyst, Hisashi Moriyama) in 2H'14 and the unlocking of significant earning power potential in FY16 and FY17," said Sur.

"Much of the incremental increase in process steps on next-gen semiconductor manufacturing technologies is in AMAT/TEL’s core areas of etch and deposition. As such, we believe the combined entity will be positioned strongly to benefit from increased capital intensity associated with next-gen technologies including 3D NAND, 20nm DRAM, and 16/14nm FinFET architectures and have the scale to tackle the transition to 450mm and EUV (at least 3+ years out). Additionally, management teams at both companies remain on focus to drive meaningful cost synergies post-deal closure and drive solid profit margin expansion and EPS growth over the next 18-24 months. Given a healthy WFE spending environment over the next few years, combined with cost synergies, we estimate AMAT/TEL can generate $1.90 - $2.00/share of earning power by FY16, and this drives our new $30 price target (up from $19 for Dec-14)," he added.

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 $22.81 yesterday.

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