AMAT stock outperforms the market
Applied Materials (AMAT) is witnessing strong growth momentum, with revenues growing in double digits and EPS (earnings per share) growing in triple digits. Such record-high earnings helped AMAT stock outperform the market and its peers.
In the last 12 months, AMAT stock rose 64%, outperforming the S&P 500 Index (SPY), which rose 13.6%, and its peer KLA-Tencor (KLAC), which rose 17.8%. However, it underperformed Lam Research (LRCX), which rose 74.7% during the same period. This trend is due to AMAT’s revenue growth, and its EPS was lower than Lam Research’s EPS.
Since the start of 2017, AMAT stock has risen 36.4%. It is currently trading at $43.80, which is on the higher end of its 52-week range of $26.41–$47.86. LRCX stock has risen 45.4% year-to-date and is currently trading at $155.20, which is on the higher end of its 52-week range of $88.51–$170.00.
Analysts’ recommendations for AMAT
Such high stock price momentum and earnings growth made analysts bullish on AMAT and LRCX, encouraging them to revise their average price targets. Analysts revised their price target for AMAT from $37.00 in February 2017 to $53.00 in August 2017. They also revised their price target for LRCX from $130.00 to $190.00 and KLAC’s price target from $85.00 to $107.00 during the same period.
Analysts have maintained a “buy” rating for both AMAT and LRCX since February 2017. They maintained a “hold” rating for KLAC.
Although KLAC and LRCX stocks have higher prices, AMAT is a larger company in terms of market capitalization. On August 7, 2017, AMAT had a market cap of $47.2 billion, which is almost double LRCX’s $25.0 billion and more than triple KLAC’s $14.0 billion.
Market capitalization tells us the cost of acquiring a company in the open market. It is calculated by multiplying the stock price by the number of shares outstanding. Investors use this metric to understand the size of a company relative to its peers.
AMAT is the largest semiconductor equipment manufacturer, making it a key beneficiary of the technology shift. Next, we’ll look at the technical indicators to understand AMAT’s stock price momentum in the short term.