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Investing.com - TD Cowen has reiterated its Buy rating on Applied Materials (NASDAQ:AMAT) with a price target of $200.00, according to a research note released Thursday. The semiconductor equipment maker, currently trading at $159.84, maintains a strong "Buy" consensus among analysts, with targets ranging from $160 to $240. According to InvestingPro analysis, the stock appears slightly undervalued at current levels.
The firm’s analysis comes during what it describes as "an interesting earnings season for semicaps," noting that both Applied Materials and Tokyo Electron have raised concerns about China WFE (wafer fabrication equipment) and potential softness in leading-edge foundry/logic in the second half of 2025. Despite market uncertainties, Applied Materials maintains robust financials with a healthy current ratio of 2.5x and strong cash flows that adequately cover its debt obligations.
TD Cowen indicated that Applied Materials’ comments on Gate-All-Around (GAA) technology appear to be directed toward TSMC and possibly Samsung (KS:005930), while Tokyo Electron’s leading-edge comments were more focused on Intel (NASDAQ:INTC).
The research firm highlighted Applied Materials’ current valuation, noting it trades at a 27% discount on next-twelve-month price-to-earnings ratio compared to competitors KLA Corporation and Lam Research (NASDAQ:LRCX), versus its historical five-year average discount of 10%.
TD Cowen expressed confidence in Applied Materials’ market share position, stating that while investors might require more confidence in this area before becoming more constructive on the stock, the firm feels "good about the market share and stock set-up here." The company’s strong market position is reflected in its impressive 48.5% gross margin and consistent dividend payments for 21 consecutive years. For deeper insights into Applied Materials’ financial health and market position, including 15+ additional ProTips, check out the comprehensive research available on InvestingPro.
In other recent news, Applied Materials reported fiscal third-quarter results that exceeded expectations, with revenue of $7.302 billion and earnings per share of $2.48, surpassing analyst estimates of $7.215 billion and $2.36, respectively. Despite this, the company provided weaker-than-expected guidance for the October quarter, projecting $6.70 billion in revenue and $2.11 in earnings per share, falling short of consensus expectations of $7.32 billion and $2.38. This guidance was influenced by slower-than-anticipated revenue from China and delays in Gate-All-Around technology ramp-up, although partially offset by better performance in other regions.
In response to these developments, several analyst firms have adjusted their price targets and ratings for Applied Materials. Daiwa Securities downgraded the stock from Outperform to Neutral, citing weak semiconductor equipment spending trends. CFRA lowered its price target to $167, maintaining a Hold rating due to trade uncertainties affecting demand. Bernstein SocGen Group reduced its price target to $195, maintaining an Outperform rating amidst uncertainty in wafer fabrication equipment spending. Cantor Fitzgerald and Mizuho (NYSE:MFG) both lowered their price targets to $200, with Cantor citing disappointing guidance and Mizuho pointing to China-related revenue slowdowns. These recent developments reflect varied analyst perspectives on the company’s future performance amidst ongoing market challenges.
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