Applied Materials, Inc. (AMAT): Potential for Shares to Grind Higher – Top Analyst


In a research note reviewing yesterday’s Applied Materials, Inc. (NASDAQ:AMAT) earnings announcement, B. Riley FBR’s top analyst Craig Ellis raised his price from $71 to $77, while maintaining a Buy rating on AMAT stock.

Ellis commented, “We believe entry points remain compelling so with positive industry and company takeaways including cash return surprises, we argue to add to AMAT. First, CEO Dickerson retains high confidence in industry fundamentals and initiated a $100B CY18/19 spending outlook, up 10% from the $90.0B CY17/18 view. Bears will now argue a CY19 Y/Y decline is possible if CY18 is up LDD Y/Y to $53.0B as LRCX  recently projected to assert peak cycle. However, we counter with the raft of recent evidence which points to upside spending pressure since LRCX reported, so like prospects for CY19 Y/Y gains. DD segment growth remains on tap in CY18, with Display up 30%+, Services +18% and Semi in between.”

“In sum, we believe the healthy outlook retains large China project upside with conservatism still present in our updated FY18-20 EPS, which rise $0.50, $0.20 and $0.16 to $4.61, $4.85 and $5.35, respectively. We like potential for shares to grind higher from cheap FY18/19 P/E of 11.3x/10.7x,” the analyst concluded

People often ask, is it worth listening to this analyst? According to TipRanks, investors who listened to Craig Ellis over the past year have made 34 percent on their Ellis bets. Ellis is currently ranked in the top 5 analysts of Wall Street.

AMAT has one of the best ratings by the Street. TipRanks reveals that AMAT has a Strong Buy analyst consensus rating with 12 back-to-back buy ratings in the last three months. Meanwhile the average analyst price target of $70 suggests the stock has an upside potential of just over 35% from the current share price for the next 12 months.