Applied Materials stock rating reiterated at Overweight by Cantor Fitzgerald

Investing.com - Cantor Fitzgerald has reiterated its Overweight rating and $200.00 price target on Applied Materials (NASDAQ:AMAT), a prominent player in the semiconductor equipment industry with a market capitalization of $130.35 billion. According to InvestingPro data, the stock currently trades at $162.49, and analysis suggests the company is modestly undervalued based on its Fair Value calculations.

The research firm addressed investor questions about potential industry changes following Applied Materials’ recent negative report, which contrasted with mixed signals from other semiconductor equipment manufacturers during the July earnings season. Despite market concerns, the company maintains strong fundamentals with a P/E ratio of 19.34 and healthy revenue growth of 6.55% over the last twelve months.

Cantor Fitzgerald attributed Applied Materials’ poor performance to "poor internal modeling" and failure to "set investor expectations appropriately," rather than any fundamental shift in the semiconductor equipment market.

The firm noted the varying outlooks across the industry, from "an optimistic KLAC, to a pessimistic TOELY/ASMI, to ASML/LRCX somewhere in the middle," highlighting the inconsistent market signals that have concerned investors.

Looking ahead, Cantor Fitzgerald expects commentary during the upcoming conference season to align with its forecast of modest wafer fabrication equipment (WFE) growth of approximately 7% to $115 billion in calendar year 2026.

In other recent news, Applied Materials reported fiscal third-quarter results that exceeded expectations, with revenue reaching $7.302 billion and earnings per share of $2.48, surpassing analyst estimates of $7.215 billion and $2.36, respectively. However, the company has faced a series of analyst actions reflecting mixed sentiments. Cantor Fitzgerald lowered its price target from $220 to $200, maintaining an Overweight rating, due to disappointing guidance for the October quarter, which projected $6.70 billion in revenue and $2.11 in earnings per share, below consensus estimates. Similarly, Bernstein SocGen Group reduced its price target to $195 from $210, citing uncertainty in future wafer fabrication equipment (WFE) spending but kept an Outperform rating. On the other hand, TD Cowen reiterated its Buy rating with a price target of $200, highlighting concerns over China WFE and potential softness in the semiconductor market. In contrast, Daiwa Securities downgraded the stock from Outperform to Neutral, adjusting its price target to $170, following quarterly results that fell short of expectations and noting weak trends in semiconductor equipment spending. Additionally, CFRA lowered its price target to $167, maintaining a Hold rating, due to trade uncertainties impacting near-term demand and adjusted earnings estimates for the coming years. These developments reflect varied analyst perspectives amid ongoing challenges in the semiconductor industry.

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