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Investing.com - Stifel has lowered its price target on Applied Materials (NASDAQ:AMAT) to $180.00 from $195.00 while maintaining a Buy rating on the semiconductor equipment maker. The company, currently valued at $151 billion, trades near InvestingPro’s Fair Value estimate, with a P/E ratio of 22.9x and a dividend yield of 0.98%.
The price target reduction follows Applied Materials’ fiscal third-quarter results, which showed revenue and earnings per share exceeding estimates, but a weaker-than-expected outlook for the fiscal fourth quarter. The company maintains strong financial health, as indicated by its "GOOD" rating on InvestingPro’s comprehensive assessment framework.
Applied Materials guided for a high-single-digit quarter-over-quarter revenue decline in the fourth quarter, compared to Stifel’s previous expectation for flat performance. The company cited a 20% projected quarterly decline in China shipments after a 44% increase in the third quarter, along with lower leading-edge foundry/logic demand.
The weaker China outlook is partially offset by higher ICAPS (IoT, Communications, Automotive, Power, and Sensors) business excluding China, according to the company’s guidance.
Despite the reduced price target, Stifel maintained its Buy rating based on expectations that Applied Materials will capture an above-average share of leading-edge foundry/logic and DRAM/HBM (High Bandwidth Memory) investment going forward. With revenue growth of 6% over the last twelve months and strong cash flows, the company shows promising fundamentals. Discover 12 additional exclusive insights about AMAT with an InvestingPro subscription, including detailed valuation analysis and growth prospects.
In other recent news, Applied Materials reported stronger-than-expected earnings for the third quarter of fiscal 2025. The company achieved an earnings per share of $2.48, surpassing the forecast of $2.36, and generated revenue of $7.3 billion, exceeding expectations of $7.22 billion. Despite these positive financial results, Applied Materials faces several challenges impacting its outlook. Barclays maintained an Equalweight rating on the company, highlighting issues such as a 24% quarter-over-quarter decline in Chinese revenue and an overall 8% sequential decline. Goldman Sachs reiterated a Buy rating, noting weak guidance due to a $500 million drop in China and additional pushouts from leading-edge logic customers. Meanwhile, Summit Insights downgraded its rating from Buy to Hold, citing concerns about U.S. export restrictions to China and broader market headwinds. These developments indicate a complex landscape for Applied Materials amid robust earnings.
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