Applied Materials Misses Q4 Expectations; Shares Sink 5.1%


Materials engineering solutions provider Applied Materials, Inc. (AMAT) reported weaker-than-expected Q4 results due to ongoing supply chain challenges. Shares of the company were down 5.1% during an extended trading session on November 18.

The company also provided guidance for the first quarter of fiscal 2022 below the analyst expectations.

Q4 Performance Misses Expectations

The company’s adjusted earnings of $1.94 per share grew 55% year-over-year, but fell a cent short of analysts’ expectations of $1.95 per share. AMAT reported earnings of $1.25 per share in the prior-year period.

Net sales jumped 31% year-over-year to $6.12 billion, but fell short of the analysts’ estimates of $6.34 billion. During the fourth quarter, the company stated that its Semiconductor Systems’ backlog grew from $5.5 billion to $6.7 billion, and the company expects continued strength in 2022.

Meanwhile, operating margin grew 480 bps to 33.1% against 28.3% in the prior-year quarter. (See Applied Materials stock chart on TipRanks)

Guidance Below Expectations

Based on the continued impact of the ongoing supply chain challenges, management provided the financial guidance for the first quarter of fiscal 2022.

The company forecasts adjusted earnings in the range of $1.78 per share to $1.92 per share, lower than the consensus estimate of $2.01 per share. Revenues are forecast to be $6.16 billion with a possible variation of plus or minus $250 million, against the consensus estimate of $6.5 billion.

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Management Weighs In

AMAT CEO, Gary Dickerson, commented, “Demand for semiconductors and equipment continues to grow as the pandemic accelerates digital transformation of the economy, and currently, our supply chain cannot keep up.”

He further added, “We expect supply shortages of certain silicon components to persist in the near-term, and managing these constraints in partnership with our suppliers and chipmakers is our top priority.”

Wall Street’s Take

Following the Q4 results, Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating with the price target of $161 (1.4% upside potential).

Consensus among analysts is a Moderate Buy based on 8 Buys and 5 Holds. The average Applied Materials price target of $161.45 implies 1.7% downside potential.

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