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Investing.com - Morgan Stanley (NYSE:MS) maintained its Equalweight rating and $169.00 price target on Applied Materials (NASDAQ:AMAT), a prominent player in the semiconductor equipment industry with a market capitalization of $146 billion, on Monday. According to InvestingPro data, the company maintains a "GOOD" financial health score, supported by strong profitability metrics and consistent dividend payments.
The firm expects Applied Materials to guide its October quarter revenue up by low single digits, approximately $7.4-7.5 billion. This projection exceeds Morgan Stanley’s estimate of flat growth and the Street consensus of 1.5% growth. The company has demonstrated solid performance, with a 6% revenue growth over the last twelve months and maintains a healthy P/E ratio of 22.
Morgan Stanley notes that the revenue drivers for Applied Materials are expected to be TSMC and DRAM, rather than China, suggesting relatively favorable earnings quality for the semiconductor equipment manufacturer.
Despite the positive near-term outlook, Morgan Stanley indicates that Applied Materials is unlikely to provide positive commentary about its outlook for 2026 due to market uncertainty.
The firm observes that Street estimates already project 6% year-over-year growth for fiscal year 2026, compared to Morgan Stanley’s expectation of flat performance, and does not anticipate that the upcoming earnings report will lead to substantial revisions in consensus estimates for FY26.
In other recent news, Applied Materials has announced its quarterly earnings forecast for the upcoming October quarter, projecting revenue growth in the low single digits, estimated between $7.4 billion and $7.5 billion. This guidance surpasses both Morgan Stanley’s flat growth estimate and the Street consensus of 1.5% growth. Additionally, Goldman Sachs has initiated coverage on Applied Materials with a Buy rating and set a price target of $225, highlighting the company’s potential benefits from the semiconductor industry’s transition to 3D architectures. However, Redburn-Atlantic has downgraded the stock from Buy to Neutral, citing concerns over market share loss in its Physical Vapor Deposition segment to competitors like the Chinese firm Naura.
Furthermore, Applied Materials has declared a quarterly cash dividend of $0.46 per share, marking a 15% increase from the previous dividend. This increase continues the company’s eight-year streak of raising dividends. Meanwhile, the broader semiconductor equipment sector, including Applied Materials, faced pressure following ASML (AS:ASML)’s warning about potential growth uncertainty in 2026 due to U.S. tariff concerns. These recent developments reflect a mix of strategic positioning and market challenges for Applied Materials.
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