Skip to main content

Market Overview

Applied Materials Posts Solid Q3 Results, But Faces Near-Term Headwinds, KeyBanc Says

Applied Materials Posts Solid Q3 Results, But Faces Near-Term Headwinds, KeyBanc Says

Applied Materials, Inc. (NASDAQ: AMAT) reported strong results for the fiscal third quarter and reiterated its full-year guidance. However, a significant increase in operating expenses would impact the company’s performance in the near term, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Weston Twigg maintained an Overweight rating on Applied Materials while reducing the price target from $56 to $54.

The Thesis

Despite the strong results and unchanged 2019 guidance, there is concern around the low gross margin outlook, Twigg said in the note.

Applied Materials’ strong quarterly results were backed by better-than-expected demand for semiconductor equipment. Twigg mentioned, however, that overall demand remained weak in the quarter, with memory producers continuing to limit new capacity and display demand being muted.

Management’s guidance incorporates a low gross margin outlook, suggesting the company may lower pricing to gain market share as well as significantly increase its operating expenses in the January quarter, the analyst said.

He added that the increase in operating expenses does not coincide with expectations of revenue growth in the January quarter.

Although Applied Materials expects demand to recover in 2020, with growth in all segments, near-term headwinds remain, Twigg noted. He lowered the estimates for the fiscal fourth quarter and the full year from 80 cents to 76 cents and from $3.01 to $3.00, respectively.

Price Action

Shares of Applied Materials had declined by 1.8% to $46.28 at time of publishing on Friday.

Related Links:

What Analysts Have To Say About Nvidia Following Earnings Beat

Benzinga's Top Upgrades, Downgrades For August 16, 2019

Latest Ratings for AMAT

Feb 2021Morgan StanleyMaintainsEqual-Weight
Feb 2021Wells FargoMaintainsOverweight
Feb 2021Credit SuisseMaintainsOutperform

View More Analyst Ratings for AMAT
View the Latest Analyst Ratings


Related Articles (AMAT)

View Comments and Join the Discussion!

Posted-In: KeyBanc Capital Markets Weston TwiggAnalyst Color Earnings News Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at