Applied Materials Hits New 52-Week High on Strong Q1 Results

Shares of Applied Materials, Inc. AMAT rallied to a new 52-week high of $61.76, eventually closing a tad bit lower at $61.61 on Mar 9.

The momentum can be attributed to the company’s impressive first-quarter fiscal 2018 results. Applied Materials reported pro-forma earnings of $1.06 per share, up 59% year over year. Revenues of $4.2 billion, increased 28.2% on a year-over-year basis, which was driven by product portfolio strength.

Since Feb 14 (first-quarter earnings release date) the stock has gained 18.6%, outperforming the industry’s rally of 14.6%. We believe that Applied Materials strong pipeline of enabling technologies along with emerging trend in semiconductors and display areas will drive growth in 2018.

Currently, Applied Materials sports a Zacks Rank #1 (Strong Buy) and has a market capital of $54.72 billion.

 

 

Robust Product Portfolio

Applied Materials has a well-differentiated product portfolio, which helps the company to maintain a strong market position.

Strong efforts to expand beyond semiconductors, especially in display, have benefited the company. Introduction of Gen 10.5 for televisions and organic LED displays for mobiles have new opened new growth avenues for the company.

Further, the company’s focus on patterning, inspection and metrology remains positive for gaining market share. In patterning, Applied Materials offer materials-enabled solutions to customers.

In inspection and metrology market E-Beam is experiencing increasing adoption, which bodes well for the company.

Technological Advancement

Applied Materials continues to benefit from technological advancements in semiconductor and display fronts. Moreover, rising demand for semiconductors and displays aided by the emergence of Internet of Things (IoT), big data and artificial intelligence, cloud infrastructure, virtual reality and smart vehicles, is a tailwind.

Further, the company is well positioned for NAND supply which is required for the growing data storage market. Applied Materials’ market share has gained significantly with its strength in 3D NAND, DRAM and patterning. Management expects increasing DRAM and logic spending in 2018.

 

Applied Materials, Inc. Revenue (TTM)

 

Applied Materials, Inc. Revenue (TTM) | Applied Materials, Inc. Quote

 

Estimate Revisions Positive

Additionally, the company witnessed an upward revision in its earnings estimates in last 30 days. The Zacks Consensus Estimate for fiscal 2018 and 2019 is currently pegged at $4.39 and $4.55, respectively.

Stocks to Consider

Investors interested in the broader technology sector can consider Lam Research Corporation LRCX, Advanced Energy Industries AEIS and ASML Holding ASML. While Lam Research sports a Zacks Rank #1, Advanced Energy Industries and ASML Holding carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Lam Research, Advanced Energy Industries and ASML Holding are currently pegged at 14.85%, 9% and 18.65%, respectively.

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