Analysts Weigh In On Applied Materials Earnings Print: What Investors Need To Know

Semiconductor equipment provider Applied Materials, Inc AMAT beat the Street's expectations for its fiscal first quarter.

The Santa Clara, California-based company issued upbeat guidance for the current quarter. As a result, several prominent analysts issued notes on the stock.

By The Numbers: For the quarter ending on Jan. 29, revenue came in 7% higher year-over-year to $6.74 billion, while adjusted earnings per share came in at $2.03, beating the consensus of $1.93 per share on revenues of $6.69 billion, according to Benzinga Pro.

Check out more analyst ratings here. 

Applied Materials is guiding adjusted earnings of $1.84 per share on sales of $6.4 billion for the current quarter. This beats analysts' estimates of earnings of $1.76 per share on sales of $6.29 billion in the fiscal second quarter. What do the analysts think?

• Bernstein analyst Stacy Ragson reiterated an outperform rating but raised the price target from $130, to $140 based on the company’s strength in ICAPS (IoT, Communications, Automotive, Power and Sensors).
• Needham analyst Quinn Bolton maintained a buy rating, but raised the price target from $120 to $135.
• Keybanc analyst Steve Barger maintained a sector weight rating, and did not update its price target.

Bernstein

During the company's earnings call, it mentioned that leading ICAPS companies are investing in both technology and capacity to serve growing demand across a wide range of verticals.

Applied Materials said it is well-positioned to outperform the market in 2023 with its resilient and balanced market exposure.

Ragson said the company's strong position is evident in its backlog and trailing node demand, indicating a potentially less cyclical impact and paving the way for a return to structural growth in CY24. Further, the impact of China restrictions on AMAT's sales appears to be minimal, with leading-edge foundry/logic and memory sales in the region close to zero.

Needham

Bolton said the company’s year-over-year growth in ICAPS spending in 2023, as mature manufacturers add capacity and used equipment becomes unavailable, is expected to be sustainable.

The Applied Materials backlog has grown for the ninth consecutive quarter, even with pushouts and cancellations from the leading edge.

Keybanc

Barger noted Applied Materials' strong backlog, which has grown for nine consecutive quarters, along with its position in ICAPS, which is showing steady growth, and the resilience of its service business, primarily contributed to its outperformance relative to peers.

Keybanc noted the overall performance of the company's quarter and outlook which exceeded expectations prompted its modest increase in estimates.
Price action: Shares of Applied Materials are trading 0.66% higher to $116.13, according to Benzinga Pro. 

Read next: Chipotle Says No To Price Hikes: Analyst Bullish As Company Focuses On Growth Through Volume