UPDATE: Deutsche Bank Upgrades Applied Materials

Deutsche Bank upgraded Applied Materials, Inc. AMAT from Hold to Buy and raised its price target from $22 to $30.

Analyst Sidney Ho commented that “AMAT is an underappreciated technology leader...We expect AMAT to benefit from multiple technology inflections in the next two to three years, which could drive WFE spending to $36-37 billion.”

Ho “expected the merger with Tokyo Electron (TEL) to close in the next few months, creating a company (new name Eteris) that has ~32 percent WFE market share.”

The analyst note concluded that “Combined with aggressive share repurchases, we see EPS of ~$2.00 in 2016E and ~$2.50 in 2017E. At 12x 2016E PF EPS, AMAT is attractively valued relative to semicap (avg 14x) and large cap semis (avg 15x). As such, we upgrade AMAT to Buy with a $30 price target based on 15x PF CY16E EPS.”

Applied Materials traded at $25.28 in the premarket, up 0.96.