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Applied Materials Targets Raised by Analysts After Profit Report

Analysts boosted price targets on Applied Materials after the chip major's stronger-than-expected earnings report.
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Applied Materials  (AMAT) - Get Applied Materials Inc. Report shares rose on Friday as analysts raised their price targets after the semiconductor titan reported revenue and adjusted profit that beat analysts’ expectations.

In the fiscal 2021 first quarter ended Jan. 31, revenue registered $5.16 billion, up 24% from $4.16 billion in the year-earlier quarter. The latest figure topped the FactSet analyst consensus of $4.98 billion.

Adjusted net income hit $1.39, beating the analyst consensus of $1.28.

Shares of the Santa Clara, Calif., company recently traded at $120.07, up 5.9%. They'd soared 69% over the six months through Thursday amid strong chip demand during the COVID pandemic. That compares with a 24% climb for the Nasdaq Composite during that period.

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As for the analysts, Cowen lifted its price target to $140 from $120 and affirmed its outperform rating. “We believe there is still upside to future earnings potential ($7-plus) due to industry trends, product positioning, Intel  (INTC) - Get Intel Corporation Report insourcing, buybacks and Kokusai accretion,” Cowen analysts wrote.

“AMAT's semiconductor systems business grew over 25% in calendar year 2020, driven by product diversity and market share gains. This momentum is expected to continue into 2021.”

Further, “management expects wafer [fabrication] spending growth to be over 15%,” Cowen said. “While the display outlook is unchanged (similar to fiscal year 2020 levels), the overall company's margin structure looks robust.”

Among other analysts, J.P. Morgan lifted its share-price target to $146 from $88, Deutsche Bank to $140 from $125, Barclays to $125 from $115, Mizuho to $130 from $96, KeyBanc to $144 from $104 and Needham to $130 from $110.