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Applied Materials Inc AMAT

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Applied Materials Poised for Remarkable Growth in Fiscal 2021; Raising FVE to $131

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Wide-moat Applied Materials reported fiscal third-quarter results above management’s guidance, while guiding fiscal fourth-quarter revenue above our expectations. We note Applied and its peers have all called for strong growth in 2021, driven by record capital expenditure levels at TSMC and Intel as well as solid memory spending. Management expects Applied’s fourth-quarter revenue to be up 34% year over year at the midpoint, with momentum persisting into 2022. Consequently, we are raising our fair value estimate to $131 per share from $125. Shares look fairly valued at current levels.

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Company Profile

Business Description

Applied Materials is one of the world's largest suppliers of semiconductor manufacturing equipment, providing materials engineering solutions to help make nearly every chip in the world. The firm's systems are used in nearly every major process step with the exception of lithography. Key tools include those for chemical and physical vapor deposition, etching, chemical mechanical polishing, wafer- and reticle-inspection, critical dimension measurement, and defect-inspection scanning electron microscopes.

Contact
3050 Bowers Avenue, P.O. Box 58039
Santa Clara, CA, 95052-8039
T +1 408 727-5555
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Jul 31, 2021
Fiscal Year End Oct 31, 2021
Stock Type Cyclical
Employees 24,000

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Applied Materials Eyes Strong Growth; Raise FVE to $131
We note Applied and its peers have all called for strong growth in 2021, driven by record capital expenditure levels at TSMC and Intel as well as solid memory spending. Management expects Applied’s fourth-quarter revenue to be up 34% year over year at the midpoint, with momentum persisting into 2022. Consequently, we are raising our fair value estimate to $131 per share from $125.
Abhinav Davuluri
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