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Applied Materials Outlook Draws Analyst Praise, Higher Targets

Applied Materials price targets were upgraded by analysts at JPMorgan, Cowen and Stifel after the chip-equipment major's outlook.

Shares of Applied Materials  (AMAT) - Get Applied Materials, Inc. Report wavered Friday after the semiconductor-equipment major on Thursday reported mixed fiscal-second-quarter earnings and received a number of positive reviews and price-target upgrades from Wall Street analysts.

Shares of the Santa Clara, Calif., company at last check were off 0.9% at $129.11. The stock climbed 51% this year through Thursday’s close.

Applied Materials gave a bullish forecast for the current quarter, boosted by orders from chipmakers, which are rushing to add capacity to meet a flood of demand for
their products.

Revenue will be nearly $5.92 billion for the three-month period ending in July, the company estimated.

Analysts at J.P. Morgan raised their price target on the chip-equipment producer to $160 from $146.

J.P. Morgan, which has an overweight rating on the stock,  said it expects Applied Materials to "gain a higher market share in the wafer fab equipment segment over the next few years, amid a strong semiconductor demand environment with supply shortages that will likely persist through the first half of 2022."

The firm expects Applied Materials to gain market share in the medium term "in a constructive WFE-spending environment."

AMAT "remains laser-focused on meeting its target financial model," J.P. Morgan analysts said.

Cowen raised its price target on AMAT to $175 from $160. 

"We believe in the sustainability of this level of high [wafer-fabrication equipment] spending over the next few years and a 30% operating margin profile as well,” the firm said. Cowen rates Applied Materials outperform.

Stifel said Applied is positioned to outperform market trends over the long term.

The firm has a buy rating on the stock and raised its price target to $170 from $160.

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Needham said Applied Materials has "maintained its lead and relative outperformance" in the semiconductor space.

Analysts at Needham reiterated a buy rating on the stock and affirmed their price target of $153.

"As the wafer fab equipment market leader, AMAT is exposed to the secular growth of" that industry, they said.

"AMAT has a balanced mix of business between the logic/foundry and memory end markets, as well as the broadest product portfolio with a #1 or #2 position in multiple billion-dollar categories," the analysts noted. 

These factors "should provide growth, stability, and profitability to the company for multiple years." 

Credit Suisse reiterated its price target of $175 and outperform rating.

Barclays was more conservative,, saying, "The company is well-positioned to benefit from foundry/logic strength, but this is largely reflected in the stock price."

Barclays affirmed its equal weight rating and $150 price target.

Morgan Stanley analysts also maintained a conservative stance.

"We note that the stock is at the midpoint of a roughly 30-point trading range in the last few months, and we would expect it to remain in that range," they said.

MS analysts don't see "the stock hitting new highs this year — but we also see it as relatively compelling at the lower end of that trading range."

The firm has an equal-weight rating and a price target of $139 on Applied Materials.