Shares of semiconductor material provider Applied Materials (AMAT) - Get Report were rising Wednesday after analysts at Susquehanna published a bullish note on the company ahead of its earnings release Thursday.
The firm upgraded the stock to positive from neutral on its view that Appled Materials has secured "major memory wins," reversing the market share losses it suffered between 2016 and 2018.
"We believe AMAT has recently won memory designs, with systems shippable in early 2020, that is expected to help AMAT regain some of the lost share," Susquehanna's note says. "Our updated FY/CY20 is based on AMAT regaining ~200 bps of share, translating to $750-$1,000 million of incremental revenues."
Its not all clear sailing for the company as the U.S.-China trade war could result in sentiment-related headwinds. Susquehanna isn't worried, however.
"Although the continued Tariff dispute is viewed as a 'headline' overhang, we remind investors the majority of semiconductor chips (particularly memory) are manufactured outside of China. In our view, the downside risk stems from a more prolonged depressed memory margin profile (well into 2020) that could cause memory customers to have a slower recovery in capex spending," the note read.
Applied Materials shares were up 3.75% to $41.51.