UPDATE: Bank Of America Reiterates On Applied Materials On Real Expansion Opportunity Post-Merger

In a report published Friday, Bank of America analyst Krish Sankar reiterated a Buy rating on

, and raised the price target from $25.00 to $26.00. In the report, Bank of America noted, “AMAT reported October Q rev/EPS of $2.26bn/$0.27; in line with our estimate of $2.26bn/$0.27. The orders came in below our forecast with the semiconductor (SSG) unit bookings declining by 15%Q/Q. Display was down 56% Q/Q. January Q rev/EPS guidance at the midpoint was $2.32bn/$0.27, below our forecast of $2.39bn/$0.30 (Street at $2.38bn/$0.31). The management team continues to execute strongly with the cost reduction activities progressing well. While we think the product momentum is in AMAT's favor, it is not quite evident in the numbers yet (CY14 SSG revenues up 12% compared to industry WFE growing 13-15% Y/Y). Nevertheless with a strong management team, we believe the big opportunity in both top and bottom-line expansion would come after the proposed merger with Tokyo Electron (TEL). While we understand that it is difficult to predict when (or if the deal would close; from a fundamental standpoint we expect the merger to close and reiterate our Buy rating.” Applied Materials closed on Thursday at $22.62.