B.Riley FBR Believes Applied Materials (NASDAQ: AMAT) Still Has Room to Grow

By Carrie Williams

B.Riley FBR analyst Craig Ellis assigned a Buy rating to Applied Materials (NASDAQ: AMAT) today and set a price target of $63. The company’s shares closed on Friday at $56.36, close to its 52-week high of $57.34.

Ellis noted:

“AMAT reports F4Q17 results Thursday, 11/16 AMC, with a CC at 4:30 PM ET. We project an in-line to moderately better print versus the Street and an F1Q18 outlook moderately ahead. So, continued strong quarterly execution. That said, we believe after an upbeat late-September Analyst Day, robust “big spender” updates in last month, peer outlooks for MSD to HSD C18 y/y industry spending growth, and views for flattish H/H shipment linearity expectations are reasonably high. So, after a +75.0% YTD gain “sell the news” stock risk exists if the guide is in-line. Even so, we see numerous reasons shares could continue to perform well in the next 12 months. First, if industry’s wafer fab equipment spend rises 7.5%+/- in C18 as many expect Street sales growth of 10.8% seems conservative given 30%+ y/y Display growth. Second, we believe the Street under-models a potentially significant China spending ramp beginning in 2018.”

According to TipRanks.com, Ellis is a top 25 analyst with an average return of 30.7% and a 81.5% success rate. Ellis covers the Consumer Goods sector, focusing on stocks such as Sequans Communications S A, Axcelis Technologies, and Rudolph Technologies.

Currently, the analyst consensus on Applied Materials is Strong Buy and the average price target is $58.58, representing a 3.9% upside.

In a report issued on October 30, KeyBanc also reiterated a Buy rating on the stock with a $59 price target.

Based on Applied Materials’ latest earnings report for the quarter ending July 31, the company posted quarterly revenue of $3.74 billion and quarterly net profit of $925 million. In comparison, last year the company earned revenue of $3.3 billion and had a net profit of $610 million.

Based on the recent corporate insider activity of 42 insiders, corporate insider sentiment is negative on the stock.

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Applied Materials, Inc. engages in the provision of materials engineering solutions used to produce new chip and advanced display. It operates through the following segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets.