AMAT Stock Jumps on Earnings Beat and Upgrade

Semiconductor

AMAT stock surged more than 12% to $22.48 in early market action after the chip maker reported 2Q16 financial results late Thursday, beating top and bottom line estimates. Furthermore, the company guided profit for the current quarter well above the Street’s projections, on the back of strong demand for chips used in smartphones.

Applied Materials said it earned $0.34 a share during fiscal Q2 on revenue of $2.45 billion, beating the Street by $0.02. Revenue came in at $2.45 billion, beating the $2.43 billion expected forecasts.

Wall Street firms are reacting to this news, becoming more bullish on the name. Applied Materials, Inc. (AMAT) was upgraded this morning to ‘Buy’ from ‘Neutral’ at B. Riley & Co. The name’s price target was also raised to $26 at Needham, and to $26 from $22 at Cowen. Analysts at Cowen noted in their research note to investors that despite slower margin expansion, Amat’s near-term revenue upside is already pulling in the $2 per share earnings power, and they see further growth ahead.

Trading Metrics

AMAT stock is currently printing a very strong average trading volume with the issue trading more than 12 million shares, less than 30 minutes into the trading session. That compares to the stock’s 3-month average daily volume of 11.02 million shares.

On valuation measures, Applied Materials Inc. is priced at 20.32x this year’s forecasted earnings, compared to the industry’s 22.19x earnings multiple. The company’s current year and next year EPS growth estimates stand at 11.80% and 24.10% versus industry growth rates of 9.50% and 28.00%, respectively. AMAT has a t-12 price-to-sales ratio of 2.36. EPS for the same period registers at $1.09.

Applied Materials shares have declined 5.82% in the last 4 weeks while advancing 8.91% in the past three months. Over the past 5 trading sessions the stock has gained 1.43%. The Santa Clara California-based company, which is currently valued at $25.07 billion, has a median Street price target of $23.50 with a high target of $30.00.

Applied Materials Inc. is up 1.71% year-over-year, compared with a 4.05% loss in the S&P 500.

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