Applied Materials is a large semi-conductor company. It makes integrated circuit chips for various electronics, such as smartphones, TVs, flat-panel display screens, and so on. As a result, this stock is valued at approximately $61 billion.
Applied Materials rallied last year, showing stellar performance. It gained 90% during 2019 and began the new year with a 9% rise from January until now. Furthermore, the company’s latest earnings results also showed a strong quarter and guidance.
2020’s first-quarter revenue was $4.16 billion. It indicated an 11% increase during the last quarter. This data surpassed the Wall Street experts’ estimation of $4.11 billion.
Earnings per share are also higher than analysts expected. At $0.98, it surpassed the high end of the company’s $0.87-0.95 guidance, as well as Wall Street’s call for $0.93. As the company continues to rally due to its robust foundry/logic business, it awaits a “strong double-digit” growth this year.
Why Do Experts Recommend This Stock?
Sidney Ho from Deutsche bank noted that Applied Materials benefits from a robust foundry/logic environment. He expects that the stock’s rally will continue throughout this year. Furthermore, the company seems well-positioned for a strong 2020 years earnings, with its expectations for continued share gains and early signs of memory recovery.
Ho believes that the risk-reward for Applied Materials is favorable, as it trades at 12x versus its large-cap peers at 1415x. While the stock may lose $300 million due to the coronavirus, the long-term estimate is still very strong even with this drawback.
That’s why Ho decided to raise his price target for this stock. The 5-star analyst increased the price from the previous $72 to $75. If the target is met, the possible upside will be 15% for the investors.
It seems that Wall street’s other analysts agree with Ho. They also dubbed Applied Materials as a strong buy. According to the experts, if the average price target is $75.71, the investors will gain 17% over the coming months.