Credit Suisse Reinstating Coverage on Applied Materials
Credit Suisse is out with a research report on Applied Materials (NASDAQ: AMAT) and it is reinstating coverage with a Neutral rating and a $13 price target on shares.
In a note to clients, Credit Suisse writes, "We are reinstating coverage of AMAT with a Neutral rating, unchanged from before, following AMAT's completion of the acquisition of Varian Semiconductor (VSEA). While we are constructive on the semi cap group due to rising capital intensity, we continue to prefer KLAC/NVLS/LRCX/ASML over AMAT. Our key concerns are: (i) 25% of AMAT's revenues are from solar/FPD in CY11 - we expect this portion to decline 50%+ y/y in 2012; (ii) Risk that AMAT subsidizes its less profitable EES business with profits from semis; (iii) Longer term market share for AMAT in WFE remains stagnant/declining relative to KLAC/LRCX/ASML. We are revising CY11 Rev/ EPS from $9.70bb/$1.09 to $9.96bb/$1.11. Our new CY12 estimates of $8.09bb/$0.81 from $9.10bb/$0.82 before include VSEA contribution. Our new TP of $13 (Old $10) represents 15x of CY12 EPS of 82c plus post acquisition net cast of ~$1/share."
Shares of AMAT closed at $12.25 yesterday.
