Applied Materials Stock Is Sliding: Here's Why

Applied Materials Inc AMAT shares are trading lower Thursday morning after the company cut its fourth-quarter guidance.

The U.S. government announced new export regulations for semiconductor technology sold in China earlier this month. Applied Materials has updated its guidance to include impacts from the new regulations. 

Applied Materials now expects fourth-quarter revenue of approximately $6.4 billion, plus or minus $250 million versus average analyst estimates of $6.67 billion, according to Benzinga Pro. The company said its revised outlook reflects the impact of the new export regulations partially offset by supply chain performance improvements.

Applied Materials also lowered its adjusted earnings guidance from a range of $1.82 to $2.18 per share to a range of $1.54 to $1.78 per share versus average analyst estimates of $2.01 per share. The company said its revised earnings outlook includes a preliminary estimated impact of approximately 23 cents primarily for inventory and remanufacturing charges related to the new export regulations.

Applied Materials said it's pursuing additional export licenses and authorizations where needed. The company currently expects the new regulations to impact revenues in the first quarter of fiscal 2023 by a similar amount as in the current quarter.

Analyst Assessment: Multiple analysts lowered price targets on the stock following the company's guidance update.

• Barclays analyst Blayne Curtis maintained Applied Materials with an Equal-Weight rating and lowered the price target from $85 to $70.
• Needham analyst Quinn Bolton maintained Applied Materials with a Buy rating and lowered the price target from $125 to $90.
• Morgan Stanley analyst Joseph Moore maintained Applied Materials with an Equal-Weight rating and lowered the price target from $109 to $99.

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AMAT Price Action: Applied Materials has a 52-week high of $167.06 and a 52-week low of $74.97.

The stock was down 1.33% at $75 at time of publication.

Photo: Tom from Pixabay.