B.Riley’s top analyst Craig Ellis is out with a bullish note on shares of Applied Materials, Inc. (NASDAQ:AMAT), after the chip-materials company’s quarterly results and outlook topped Wall Street estimates.
Specifically, the company posted fiscal 4Q adjusted earnings of 0.93 a share on revenue of $3.97 billion, exceeding Street’s estimates of $0.91 and $3.94 billion, respectively. Looking ahead, AMAT forecast fiscal 1Q earnings of 94 cents to $1.02 a share on revenue of $4 billion to $4.2 billion, surpassing the Street’s $3.97 billion and $0.91 estimates, respectively.
Ellis commented, “We believe key takeaways argue for a strong Friday follow-through, in part as investors gain increased confidence in the multi-year outlook and pull-in potential for F20’s target EPS of $5.08+ […] Further, while C18’s China outlook rose $0.5B to $1.0B, implied mega-project assumptions seem just 20% of long-term potential, leaving ample room for C19 y/y growth […] Bearish peak cycle and 2019 spending intensity concerns will linger, but we believe industry’s post-2010 diversified growth evolution, healthy sector fundamentals, plus robust AMAT execution mean new estimates still have more up than downside risk.”
“We believe another stellar quarterly execution performance shows AMAT’s new product engine is firing on all cylinders and producing SAM expansion and share gains at surprisingly attractive margins. In our view AMAT’s growth story remains the most diversified in large cap Semi Caps, and we are encouraged with mgmt’s high quality view through 2018,” the analyst concluded.
As such, Ellis reiterates a Buy rating on Applied Materials shares, while raising the price target to $71 (from $63), which implies an upside of 24% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, top analyst Craig Ellis has a yearly average return of 37.5% and a 81% success rate. Ellis has a 49.2% average return when recommending AMAT, and is ranked #2 out of 4706 analysts.
Out of the 21 analysts polled in the past 12 months, 20 rate Applied Materials stock a Buy, while 1 rates the stock a Hold. With a return potential of 1.0%, the stock’s consensus target price stands at $57.68.