UPDATE: Bank of America Upgrades GT Advanced Technologies Following Positive Apple Announcement

In a report published Tuesday, Bank of America analyst Krish Sankar upgraded the rating on GT Advanced Technologies GTAT from Neutral to Buy, and raised the price target from $9.00 to $13.00. In the report, Bank of America noted, “GTAT's disappointing Q3'13 results were rightfully overshadowed by the announcement that it has entered into a multi-year supply agreement with Apple to provide sapphire for mobile applications. As part of the agreement, GT will own and operate its ASF furnaces to produce sapphire material at an Arizona-based Apple facility. In turn, Apple will provide GT with a prepayment of approximately $578 million, which we model the company recognizing in four ~$145M tranches through 2014. The company expects the arrangement to be cash positive and accretive to earnings starting next year, and plans to reimburse Apple for its investment over a five-year period beginning in 2015. We view the deal as a positive for the stock, which validates the company's argument that it is gaining traction selling its sapphire products for mobile applications. While the customer concentration could be a double-edge sword, the opportunity offsets weakness in GT's core solar segment. We upgrade our rating from Neutral to Buy at our new $13 PO.” GT Advanced Technologies closed on Monday at $8.38.