Why Analysts Are Growing Even More Positive on Applied Materials

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Although Applied Materials Inc. (NASDAQ: AMAT) reported record fiscal first-quarter financial results on Wednesday, it was not enough to move the stock significantly. Some analysts were very positive on the stock and see Applied Materials benefiting not only the semiconductor side of the business, but also from larger, higher resolution and flexible screens on the display side of the business. Practically all analysts covering Applied Materials hiked their price targets.

24/7 Wall St. has included a few of the key points from the earnings release, as well as what a few analysts said about Applied Materials after the report.

The company posted $0.67 in earnings per share (EPS) on $3.28 billion in revenue, which compares to consensus estimates of $0.66 in EPS and revenue of $3.26 billion. In the same period of last year, Applied Materials posted EPS of $0.26 and $2.26 billion in revenue.

In terms of guidance for the coming quarter, the company expects to see EPS in the range of $0.72 to $0.80 and revenues between $3.45 billion and $3.6 billion. The consensus estimates are $0.75 in EPS and $3.5 billion in revenue.

In the quarter, the company generated $646 million in cash from operations and returned $238 million to shareholders through stock repurchases and cash dividends.

President and CEO Gary Dickerson commented:

We set new records for earnings and orders in our first quarter, and 2017 is shaping up to be an outstanding year for Applied Materials. Our inflection-focused innovation strategy is delivering results and we are increasingly confident that we can maintain our trajectory of sustainable growth and raise the ceiling on our performance.

Here’s what a few analysts said after the report:

  • B. Riley raised its price target to $44 from $38.
  • Merrill Lynch has a Buy rating and raised the price objective to $45 from $40.
  • Craig-Hallum has a Buy rating and raised the price target from $40 to $44.
  • Goldman Sachs has a Neutral rating and its price target went to $39 from $38.
  • Instinet has a Buy rating and raised the price target to $40 from $34.
  • Keybanc raised its price target from $37 to $44.
  • RBC has a Sector Perform rating but raised the price target to $35 from $30.
  • UBS raised its price target to $42 from $40.

Shares of Applied Materials closed Friday at $35.67, with a consensus analyst price target of $40.34 and a 52-week trading range of $18.09 to $35.85.