Anika Begay
Morgan Stanley upgraded its outlook on Applied Materials (NASDAQ:) on Friday, slightly increasing its price target on the stock to $224 from $223, while maintaining an Equalweight rating on the stock. The firm’s view is that recent developments have significantly mitigated near-term risks related to export controls.
According to the analyst’s statement, concerns about whether the next wave of export restrictions could impact China’s DRAM industry have been alleviated. Reports had suggested that further restrictions could be on the table, but with China’s DRAMs shrinking to record lows this quarter and expected to remain so in the next, the potential impact on earnings per share (EPS) is expected to be materially limited.
The analyst expressed surprise at the countervailing strength in the trailing edge logic sectors, which had not been anticipated. However, the advanced technology drivers are perceived as favorable for Applied Materials, which influenced the company’s decision not to adopt a more cautious stance.
The valuation model used by Morgan Stanley expects to maintain a price/earnings (PE) multiple of 23 times for the calendar year 2025. Based on the new estimated EPS of $9.74 for CY25, the slight increase in the price target to $224 was justified.
The update reflects Morgan Stanley’s analysis of the current situation of Applied Materials, taking into account the potential impacts of geopolitical and market factors on the company’s performance.
In other recent news, Applied Materials has been the subject of several financial revisions and projections. The semiconductor company’s fiscal third-quarter results beat expectations, with revenue of $6.778 billion and earnings per share (EPS) of $2.12. Goldman Sachs reiterated its Buy rating on the company’s shares, expecting a positive growth trajectory through 2025. Bernstein also raised its price target on Applied Materials to $250, while maintaining an Outperform rating.
In addition to solid earnings, Applied Materials forecast growth for its fiscal fourth quarter, attributing it to increased demand in its cutting-edge Logic/Foundry and High-Bandwidth Memory sectors. Deutsche Bank revised its price target for the company to $230, noting solid financial results and modest increases in revenue and gross margin estimates.
Applied Materials also introduced a series of materials engineering innovations aimed at improving the performance per watt of computing systems. Additionally, the company announced a 25% increase in its quarterly cash dividend, from $0.32 per share to $0.40 per share.
VscekPro Insights
As Morgan Stanley revises its outlook on Applied Materials, VscekPro’s real-time data and insights provide additional context on the company’s financial health and market performance. Applied Materials has a proven track record of rewarding its shareholders, as demonstrated by increasing its dividend for six consecutive years, demonstrating a commitment to returning value to investors. Analysts have also shown confidence in the company’s earnings potential, with 18 analysts raising their earnings estimates for the coming period.
VscekPro data further illuminates the company’s market position with a solid market cap of $175.39 billion and a P/E ratio of 24.15, which, although on the higher side, may reflect investor confidence in its future growth. The company has also posted a significant return over the past week, with a total price return of 10.8%, showing its recent market momentum. Despite some volatility in stock price movements, Applied Materials maintains a solid financial footing with liquid assets that outweigh short-term obligations.
For investors looking to dive deeper into Applied Materials’ prospects, additional VscekPro Tips are available, offering insights into the company’s industry position, financial stability, and growth potential. To explore further, visit https://www.investing.com/pro/AMAT.
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