Applied Materials Upgraded On Coming SunFab Orders

PHILADELPHIA (AP) — Shares of Applied Materials Inc. advanced on Monday after a Citigroup analyst upgraded his recommendation on the stock based on "significant" upcoming orders for its solar modules production equipment.

Analyst Timothy Arcuri raised Applied Materials, a maker of chip production equipment, to "Buy" from "Hold" and added the stock to Citi's top picks list for investors, replacing MEMC Electronic Materials Inc. He also raised his Applied Materials target price by $2 to $17 and bumped up his 2010 earnings estimate by 4 cents to 46 cents per share.

Wall Street analysts expect 2010 earnings of 33 cents per share, according to a poll by Thomson Reuters.

Arcuri said checks at the Hamburg solar show led him to believe that Applied Materials is about to sign a "significant" second wave of orders for its SunFab solar production equipment, including four new lines of about 300 megawatts in India.

While the analyst noted that SunFab's long-term success isn't certain given that module prices are falling in the market, the company is adding new customers, cutting costs, lined up about $1 billion in savings and has a renewed focus on regaining market share. These factors are enough to drive the stock higher, Arcuri said in a research note.