Goldman Sachs Reiterates Buy Rating on Applied Materials (AMAT)

Goldman Sachs is out with a research report this morning, where it reiterates its Buy rating on Applied Materials Inc. AMAT; it has a 6-month price target of $17.00. The GS analysts cited the company’s recent earnings report, which was better than expected due to higher than expected sales and a gross margin that was better by 72 basis points. The analysts are raising their CY10E/CY11E EPS to $1.15/$1.70 from $1.10/$1.55 on slightly higher sales and a lower tax rate. The analysts also noted that the company is seeing some visibility in the space, noting that the semi equipment shipment strength can continue. As for valuation, the GS analysts noted, “Our 6-month, $17 price target is based on 14X (from 15X to account for increased market volatility) normalized EPS of $0.90 (from $0.85) in its core markets, $3 in net cash, and $1 for the improved EES segment.”