Applied Materials Stock Tanks On Weak Outlook, China Headwinds

Applied Materials Inc. AMAT stock is plunging on Friday after the company reported financial results for the third quarter after market close on Thursday.

The chip equipment manufacturer reported third-quarter revenue of $7.3 billion, beating analyst estimates of $7.22 billion, with adjusted earnings of $2.48 per share, beating analyst estimates of $2.36 per share.

Outlook

“We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing,” said Brice Hill, senior vice president and CFO of Applied Materials.

Also Read: China’s E-Town Claims Applied Materials Poached Staff, Misused Proprietary Chip Tech

“We are navigating and adapting to the near-term uncertainties by leveraging our robust supply chain, global manufacturing footprint, and deep customer relationships.”

Applied Materials expects fourth-quarter revenue of $6.7 billion, plus or minus $500 million, versus estimates of $7.33 billion.

The company expects fourth-quarter adjusted earnings to be between $1.91 and $2.31 per share, versus estimates of $2.39. 

Street Opinions Split

Analyst sentiment on Applied Materials was mixed following the latest updates. UBS maintained a Neutral rating but trimmed its price target from $185 to $180, while Wells Fargo kept an Overweight stance, cutting its target from $215 to $205.

Cantor Fitzgerald also maintained an Overweight rating, lowering its target from $220 to $200. Morgan Stanley held its Equal-Weight rating but nudged its target higher from $169 to $172.

JPMorgan reiterated an Overweight view and lifted its target from $210 to $220. Stifel remained bullish with a Buy rating but reduced its target from $195 to $180, and Wolfe Research kept an Outperform rating while cutting its target from $230 to $200.

Mizuho also maintained an Outperform view, trimming its target from $220 to $200. Evercore ISI reiterated an Outperform rating and kept its $209 target unchanged. Meanwhile, Bank of America Securities downgraded the stock from Buy to Neutral and reduced its target from $190 to $180.

Price Action: AMAT stock is trading lower by 12.06% to $165.63 at last check Friday.

Read Next:

• Rivian Faces Nearly $100 Million Revenue Shortfall Amid Trump’s Fuel Economy Rule Reversal: Report

Image via Shutterstock