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Investing.com - Evercore ISI has reiterated an Outperform rating on Applied Materials (NASDAQ:AMAT) with a price target of $209.00, according to a research note released Friday. The semiconductor equipment maker, currently valued at $151 billion, is trading slightly above its InvestingPro Fair Value, with analyst targets ranging from $165 to $250.
The semiconductor equipment maker reported earnings per share for the July quarter that exceeded consensus estimates by 5%, while its October quarter earnings outlook came in 11% below expectations due to weakness in China and lumpiness in leading-edge foundry and logic revenues. The company maintains strong profitability with a 48% gross margin and has generated $5.9 billion in free cash flow over the last twelve months.
Evercore ISI believes Applied Materials is currently trading at an attractive valuation, noting the stock trades at a 21% discount compared to Lam Research (NASDAQ:LRCX) on a next-twelve-months price-to-earnings basis, versus historical lows of 24% over the past decade. InvestingPro analysis reveals the company’s strong financial health with a "GOOD" overall score, supported by 13+ additional ProTips available to subscribers.
The $209 price target reflects a 21x multiple on Evercore’s 2027 earnings per share estimate of $11, discounted back to 2025.
The firm expects Applied Materials to outperform the wafer fabrication equipment sector due to its exposure to key semiconductor technology trends including gate-all-around transistors, backside power delivery, high bandwidth memory, advanced DRAM, and advanced packaging.
In other recent news, Applied Materials reported stronger-than-expected financial results for the third quarter of fiscal 2025, with earnings per share (EPS) of $2.48, surpassing the forecast of $2.36. Revenue also exceeded expectations, reaching $7.3 billion compared to the anticipated $7.22 billion. Despite these positive results, Stifel lowered its price target for Applied Materials from $195.00 to $180.00, citing a weaker-than-expected outlook for the fiscal fourth quarter. Barclays maintained its Equalweight rating and $170.00 price target, highlighting challenges in China, where revenue is expected to decline significantly. Goldman Sachs reiterated its Buy rating with a $215.00 price target, noting weak guidance due to a substantial drop in Chinese business and delays from certain customers. Meanwhile, Summit Insights downgraded the stock from Buy to Hold, pointing to concerns over U.S. export restrictions to China and broader market headwinds. These developments reflect a complex landscape for Applied Materials, with mixed assessments from various financial analysts.
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