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Investing.com - CFRA lowered its price target on Applied Materials (NASDAQ:AMAT) to $167 from $175 while maintaining a Hold rating, citing trade uncertainties affecting near-term demand. The semiconductor equipment giant, with a market capitalization of $130 billion and solid financial health according to InvestingPro analysis, currently trades below its Fair Value.
The research firm reduced its fiscal year 2025 earnings per share estimate by $0.05 to $9.46 and cut its fiscal 2026 forecast by $0.50 to $9.80. CFRA also initiated a fiscal 2027 earnings estimate of $11.01 per share. Despite these adjustments, Applied Materials maintains strong fundamentals with a P/E ratio of 19.66 and revenue growth of 6% over the last twelve months.
CFRA attributed Applied Materials’ muted outlook to company-specific factors, including above-peer exposure to trailing edge technology, which faces more domestic competition in China, and lower exposure to NAND memory, which is benefiting from upgrade activity.
The firm noted that Applied Materials’ weak China forecast is largely due to its backlog of unapproved licenses, with expected business levels 15%-20% below 2024 levels. This reduction rate is similar to the 15% fee recently agreed to by NVIDIA and AMD for their advanced China chips.
For leading-edge logic chips, which are seeing 100% factory utilization, CFRA expects steady demand growth despite potential order lumpiness due to high customer concentration, particularly at Taiwan Semiconductor Manufacturing Company (TSMC).
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. These figures surpassed analyst estimates of $7.215 billion in revenue and $2.36 in earnings per share. However, the company provided weaker-than-expected guidance for the October quarter, projecting $6.70 billion in revenue and $2.11 in earnings per share, which fell short of consensus expectations of $7.32 billion and $2.38, respectively. Several firms have adjusted their price targets for Applied Materials, citing various factors affecting the company’s outlook. Bernstein and Cantor Fitzgerald lowered their price targets to $195 and $200, respectively, both while maintaining positive ratings. Mizuho also reduced its price target to $200, attributing the adjustment to slower-than-expected revenue from China and technological challenges. UBS lowered its price target to $180, noting company-specific challenges, while Needham maintained a $240 price target, despite acknowledging the company’s recent earnings miss. These developments highlight the mixed sentiment among analysts regarding Applied Materials’ future performance.
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