Applied Materials (AMAT) stock dropped after the semiconductor equipment maker gave its outlook for the next four years at a virtual investor meeting on Tuesday. But many Wall Street analysts liked what they heard, and several raised their price targets on AMAT stock.
The Santa Clara, Calif.-based company said it expects to grow revenue by over 55% and adjusted earnings per share by more than 100% by fiscal 2024, compared with fiscal 2020.
Under its base case, Applied Materials forecast fiscal 2024 adjusted earnings of $8.50 a share on revenue of $26.7 billion. In fiscal 2020, Applied Materials earned an adjusted $4.17 a share on sales of $17.2 billion.
“The target model appears conservative,” Credit Suisse analyst John Pitzer said in a note to clients. He rates AMAT stock as outperform with a 12-month price target of 175.
Applied Materials Guidance Deemed Prudent
On the stock market today, AMAT stock dipped 0.3% to 139.14.
Buy-side analysts had expected fiscal 2024 earnings of $10 a share and were disappointed by the $8.50 target, Evercore ISI analyst C.J. Muse said in a report. Still, he kept his outperform rating on AMAT stock with a price target of 175.
Needham analyst Quinn Bolton maintained his buy rating on AMAT stock and upped his price target to 153 from 130.
“We believe AMAT’s prudent outlook is a blessing in disguise,” Bolton said in a note to clients. “Behind the conservative outlook is AMAT’s confidence in a much less volatile and a more steadily growing WFE (wafer fabrication equipment) industry, which in our view justifies a continued re-rating of AMAT’s stock.”
AMAT Stock On IBD Big Cap 20 Watchlist
Cowen analyst Krish Sankar reiterated his outperform rating on AMAT stock and raised his price target to 160 from 140.
Applied Materials “is uniquely positioned to outperform the already strong industry growth over the next few years,” Sankar said. He noted the company’s strong product and services portfolio and semiconductor industry drivers such as artificial intelligence.
At its investor meeting, Applied Materials unveiled plans to grow the company’s revenue, earnings and free cash flow by enabling customers to accelerate improvements in chip power, performance, area, cost and time to market.
The company also committed to returning between 80% and 100% of free cash flow to shareholders.
At least five Wall Street firms raised their price targets on AMAT stock following the investor day event.
AMAT stock is on IBD’s Big Cap 20 stock list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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