Applied Materials Remains On Goldman's Conviction Buy List Following Analyst Day

Goldman Sachs has come out with encouraging opinion after Applied Materials, Inc. AMAT hosted an Analyst Day event Wednesday. There are two key factors that pushed analysts Toshiya Hari, Charles Long and Alex Karpos to keep Applied Material's place on the Conviction Buy List and $33 price target on the stock:

  • The detailed description of the current and future technology inflections with particular emphasis on process control, patterning, display, memory and logic.
  • The establishment of a fresh earnings model from fiscal year 2019, which was slightly ahead of analysts' estimates.

"The company's new FY19 EPS base case of $2.80 compares to our CY18 estimate of $2.71, with the caveat of management's historically conservative approach to longer term expectations (already earning close to the FY18 model from the 2015 event). AMAT also outlined expectations for 2017 WFE to increase 3 percent (from $32.6 billion in CY16 to $33.5 billion in CY17), with growth expected across all segments – foundry/logic, NAND and DRAM," the analysts opined in their note to clients.

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The brokerage is excited by the opportunities from patterning, which are estimated at $1 billion, and process control, which the management views as a $300 million incremental revenue opportunity spread over a three-year period with share gains on eBeam. As far as display is concerned, Goldman pointed out that the management is confident of tripling revenue from SAM in the upcoming period.

The analysts concluded that they were incrementally confident on the road ahead for Applied Materials for fiscal year 2019 and beyond following the meeting.

Applied Materials was up 0.51 percent at time of writing, seen trading at $30.73.

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Posted In: Analyst ColorLong IdeasNewsPrice TargetReiterationAnalyst RatingsMoversTechTrading IdeasAlex KarposCharles LongGoldman SachsToshiya Hari
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