Industrials

Will Applied Materials Earnings Help Keep Tech Rally Afloat?

Chris Lange

Published: August 18, 2016 9:55 am

Last Updated: January 13, 2020 4:30 am

Applied Materials Inc. (NASDAQ: AMAT) is set to report its fiscal third-quarter financial results after the markets close on Thursday. This semiconductor capital equipment leader has moved up nicely this year after underperforming for all of 2015. This earnings report also has the potential to keep pushing the tech rally even further.

The consensus estimates from Thomson Reuters are $0.48 in earnings per share (EPS) on $2.84 billion in revenue. The same period from last year reportedly had EPS of $0.33 and $2.49 billion in revenue.

The analysts are very positive on the stock and see Applied Materials benefiting not only the semiconductor side of the business, but also from larger, higher resolution and flexible screens on the display side of the business. Despite reporting solid earnings in the first and second quarters that were above consensus, and guidance that was in line with expectations, the stock is still very reasonably priced.

Applied Materials may very well be one of the best technology values available for investors today. Some Wall Street analysts see continued FinFET capacity expansion (10nm/14nm/16nm) and transition to 3D NAND, with DRAM spending remaining strong next year.

Ahead of the earnings report, a few analysts weighed in on the stock:

• RBC Capital Markets reiterated a Sector Perform rating with a $28 price target.
• Morgan Stanley reiterated a Buy rating with a $25 price target.
• D.A. Davidson reiterated a Buy rating with a $32 price target.
• B. Riley reiterated a Buy rating with a $33 price target.
• Stifel has a Buy rating and a $35 price target.
• Credit Suisse has an Outperform rating with a $29 price target.
• Citigroup has an Outperform rating with a $29 price target.
• Cowen reiterated an Outperform rating with a $26 price target.
• Needham has a Buy rating and a $29 price target.
• Nomura reiterated a Buy rating with a $28 price target.

Applied Materials has outperformed the broad markets, with the stock up nearly 50% year to date. Over the past 52 weeks, the stock is up as much as 68%.

Shares of Applied Materials were trading at $27.30 on Thursday, with a consensus analyst price target of $28.45 and a 52-week trading range of $14.25 to $27.75.