Applied Materials’ Target Price Implies a 44% Upside Potential


Sep. 6 2018, Updated 10:06 a.m. ET

Average target price of $62.09 for AMAT stock

Semiconductor (SMH) company Applied Materials (AMAT) stock is trading at $43.02, which is just 1.0% above its 52-week low of $42.52 and 31.0% below its 52-week high of $62.40. AMAT stock has generated returns of -16.0% since the start of this year. Its stock has fallen close to 18.0% in the last three months.

Of the 21 analysts tracking AMAT stock, 18 recommended a “buy,” and three recommended a “hold.” There were no “sell” recommendations on the stock. The average 12-month price target for Applied Materials is $62.09, which indicates that the stock is trading at a discount of 44.0% to analysts’ estimates.

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A decline in semiconductor stock prices

In 2018, several semiconductor stocks have declined after a significant surge over the last three years. Applied Materials (AMAT), Micron (MU), and Intel (INTC) have significant exposure to China. The ongoing trade war between the United States and China have negatively impacted these stocks as well.

Chip equipment companies such as Applied Materials are dependent on spending by chip companies. Over the last three years, Applied Materials stock has tripled thanks to the upswing in spending by chip companies. This increased spending was supported by the soaring demand for chips, particularly memory chips.

Analysts haven’t reduced the price target on Applied Materials stock despite recent headwinds. Analysts seem optimistic about its performance over the next year or so, as AMAT’s revenues are expected to rise 18.7% to $17.3 billion. Its earnings per share are expected to rise 37.0% to $4.46 in fiscal 2018.


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