Applied Materials (AMAT) PT Lowered to $210 at JPMorgan

JPMorgan analyst Harlan Sur lowered the price target on Applied Materials (NASDAQ: AMAT) to $210.00 (from $240.00) while maintaining a Overweight rating.

The analyst comments "Applied materials delivered in-line Apr-Qtr revenue results, better GMs and slightly better EPS and provided an in-line (versus consensus) Jul-Qtr revenue/GM and slightly better EPS outlook reflecting strong spending trends in advanced foundry/logic/DRAM, technology transitions in NAND, partially offset by weak mature/lagging edge technology spending (primarily China which was down 21% Q/Q in the April-Qtr). Growth tailwinds are:1) leading-edge technology inflections in foundry/logic (2nm); 2) DRAM transitions/device architectures (DDR5/HBM); 3) NAND technology conversions to 200+ layers; and 4) continued momentum in advanced packaging/HBM (although the segment is trending flattish Y/Y on an annualized run-rate basis (~$1.7B per year) as the team had a strong HBM-driven ramp at the end of FY24) and headwinds include continued weak spending trends in mature/specialty (ICAPS business) both 200mm and 300mm systems compounded by the December China equipment/service restrictions. The ICAPS mature/specialty business is still ~50% of the team’s foundry/logic systems segment and therefore has a bigger negative impact (versus peers) to growth dynamics when leading edge/advanced node inflections are firing and mature/specialty demand is weak. The team suggested that it is not seeing any pull-forward of demand from future quarters due to tariff-led/trade dynamics nor have customer forecasts changed meaningfully. Despite in-line results/guidance, we are lowering our FY/CY25 revenue/EPS estimates as we account for a weaker 2H demand profile driven by tariff/trade related dynamics for the overall semi/semicap industry and lower our price target to $210."

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