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Friday, Needham analysts adjusted their outlook on Applied Materials (NASDAQ:AMAT), reducing the price target to $195 from $200, while sustaining a Buy rating on the stock. The revision follows the company's financial results for the first quarter of fiscal year 2025, which ended in January. Applied Materials, currently valued at $141 billion and trading near InvestingPro's Fair Value, exceeded expectations for the quarter but provided a second-quarter forecast for April that fell short of consensus predictions.
The company's recent performance has been a mix of ups and downs, particularly in relation to its business in China. While Applied Materials experienced an earlier surge in China compared to its peers in the second half of 2023 through the first half of 2024, it also faced a downturn ahead of its peers from the second half of 2024 into the first half of 2025. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with a healthy current ratio of 2.68 and moderate debt levels. Specifically, the company reported only a 3% year-over-year increase in China revenue for the calendar year 2024, which contrasts with the 17-31% growth seen by its U.S. counterparts.
The Needham analyst noted that despite the current softness observed by Applied Materials, the company's early entry into the China correction process could position it to emerge from the downturn sooner than its peers. This could potentially lead to a more sustainable growth trajectory driven by markets outside of China.
In response to the changing market conditions, particularly the waning strength in China, Needham has revised its estimates for Applied Materials. The slight trim in the price target to $195 reflects these updated expectations, yet the firm maintains a positive outlook on the stock with a Buy rating. The analyst expressed belief in the company's ability to navigate through the current market challenges and capitalize on potential early recovery. For deeper insights into Applied Materials' financial health, growth prospects, and 12 additional exclusive ProTips, visit InvestingPro, where you'll find comprehensive analysis and detailed valuation metrics.
In other recent news, Applied Materials has seen a series of adjustments in its stock price target by various analysts. Craig-Hallum revised the price target to $205, citing the company's growth prospects in key areas such as high bandwidth memory, gate-all-around transistors, and advanced packaging, despite anticipated challenges in the ICAPS business and trade restrictions on China.
Simultaneously, Citi raised the price target for Applied Materials to $202, highlighting a slight variance in the company's financial results and the anticipated decrease in sales in China. The analyst also noted potential growth in the Gate-All-Around technology and a forecasted return to low double-digit growth for fiscal year 2026.
Stifel analysts reduced their price target for Applied Materials to $235, maintaining a Buy rating, and expressing confidence in the company's ability to outperform the industry's expected growth. Cantor Fitzgerald, on the other hand, maintained a steady price target of $220, predicting an increase in the company's guidance due to industry trends.
These recent developments reflect the varying perspectives of analysts on the company's financial performance and growth potential.
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