Applied Materials (AMAT) Stock: Analysts Increase Price Targets on DRAM Strength

TLDR

• Stifel raised Applied Materials price target to $340 from $250, maintaining a Buy rating
• RBC Capital initiated coverage with Outperform rating and $385 price target
• Analysts cite strong positioning in DRAM and leading-edge foundry technology as growth drivers
• Stock trades at 30x P/E, representing a 20% discount compared to semiconductor equipment peers
• Company announced eighth consecutive year of dividend increases with quarterly payout of $0.46 per share

Two major financial institutions raised their outlook on Applied Materials this week. The moves reflect growing confidence in the semiconductor equipment maker’s market position.

Applied Materials, Inc., AMAT

Stifel increased its price target from $250 to $340 while keeping a Buy rating. RBC Capital initiated coverage with an Outperform rating and a $385 price target. The stock currently trades around $302.

The upgrades come as Applied Materials strengthens its position in key semiconductor manufacturing segments. Analysts point to the company’s broad product portfolio as a competitive advantage.

Stifel analysts highlighted Applied Materials’ ability to address customer technology roadmap challenges. The firm noted the company has more pathways to expand its market reach compared to many competitors.

RBC Capital’s Srini Pajjuri emphasized Applied Materials’ strong position in DRAM manufacturing equipment. Spending in this category is expected to outpace overall wafer fab equipment growth over the next 12 months.

The company faced headwinds last year from China-related challenges and weaker mature node spending. Despite these obstacles, the stock delivered a 77% return over the past year.

Valuation Creates Opportunity

At 30 times earnings, Applied Materials trades at a 20% discount to semiconductor capital equipment peers. RBC Capital views this gap as creating an attractive entry point for investors.

The company’s financial performance improved throughout the recent industry downturn. Stifel expects Applied Materials to reach higher peak revenue and profitability during the upcoming industry upcycle.

Applied Materials announced its eighth consecutive year of dividend increases. The quarterly dividend stands at $0.46 per share. This follows a 15% increase from $0.40 earlier in the year.

Analysts identified several growth drivers for the company. These include transitions to backside power technology, hybrid bonding, and advanced 3D transistor designs.

TD Cowen previously raised its price target to $315. KeyBanc Capital Markets set a target of $285. Both firms maintained positive ratings on the stock.

The company’s current share price sits near its 52-week high of $310.64. Analyst price targets range from a low of $190 to a high of $425.

UBS recently upgraded Applied Materials from Neutral to Buy. The firm set a price target of $285, driven by expectations of strong wafer fab equipment demand growth.

Market Position Strengthens

Applied Materials holds a strategic position in high-growth semiconductor segments. The company’s technology plays a crucial role in DRAM memory and leading-edge foundry production.

The semiconductor equipment market faces limited merger and acquisition activity. This environment benefits companies like Applied Materials with existing broad product portfolios.

Analysts expect wafer fab spending to increase over the next 12 months. Applied Materials should grow at least in line with the overall market during this period.

The stock receives a consensus recommendation of 1.79 among analysts. This rating reflects generally positive sentiment toward the company’s prospects.

RBC Capital noted Applied Materials outperformed the SOX semiconductor index last year. However, it lagged some U.S. equipment peers due to China-related pressures and market share shifts.

The post Applied Materials (AMAT) Stock: Analysts Increase Price Targets on DRAM Strength appeared first on CoinCentral.