How Will Applied Materials (AMAT) Stock React To This Coverage Initiation?

NEW YORK (TheStreet) -- Applied Materials (AMAT) shares are down -1.1% to $22.70 on Tuesday after analysts at Piper Jaffray (PJC) assumed coverage on the stock with an "overweight" rating and $27 price target.

The software equipment provider is well positioned in an industry that is expected to see steady growth according to the firm's report.

"We believe that industry fundamentals remain positive for equipment suppliers and that AMAT is amongst the best positioned to benefit," they said.

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Separately, TheStreet Ratings team rates APPLIED MATERIALS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate APPLIED MATERIALS INC (AMAT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 19.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AMAT's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AMAT has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 290.90% and other important driving factors, this stock has surged by 53.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AMAT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • APPLIED MATERIALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, APPLIED MATERIALS INC increased its bottom line by earning $0.21 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.21).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 303.1% when compared to the same quarter one year prior, rising from -$129.00 million to $262.00 million.
  • You can view the full analysis from the report here: AMAT Ratings Report
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