Applied Materials got bullish views from several analysts, following its fiscal second-quarter earnings beat.
Morgan Stanley analyst Joseph Moore boosted the price target on the semiconductor equipment company’s shares to $139 from $137.Moore maintained an Equal-weight rating on the shares.
Moore noted that tight supply conditions led to better near-term spending conditions, thereby boosting Applied Materials’ performance relative to peers in the quarter. However, even as the company’s guidance implied continued wafer fab equipment, or WFE, growth through 2022, Morgan Stanley sees the growth plateauing ahead in the second half of 2021.
Needham analyst Quinn Bolton reiterated a Buy rating and $153 price target. Bolton mentioned that quarterly results were solid, and the guidance for a sequential growth in third quarter results implies about 40% year-over-year growth in Semiconductor Systems Group revenues in calendar year 2021. According to the analyst, Applied Materials will see mid- to high-single digit growth in calendar year 2022 given semiconductor industry megatrends.
"We believe that AMAT's stock will find support at its current level of 16.8x our CY22 EPS estimate, and that the risk/reward is favorable, " Bolton noted.
Credit Suisse analyst John Pitzer reiterated an Outperform rating on Applied Materials shares along with a $175 price target.
Pitzer cited second-quarter results that surpassed expectations and the strong third-quarter guidance – which, according to the analyst, reflect rising cost of capacity without 450 mm, driving structural WFE growth.
But Pitzer mentions risks from slowing EPS revisions in the second half of 2021 and WFE pauses in 2023. Nevertheless, the analyst indicated that structural foundations of over $100 billion in WFE and $11-plus EPS are becoming more certain.