Beaten up Applied Materials (AMAT) is the best semiconductor stock to own now, says Wall Street investment bank Jefferies Financial Group (JEF).
Blayne Curtis, a top five-star rated analyst, says Applied Materials’ stock should benefit in coming months from recovering demand, and that the company is more insulated from U.S.-China trade disputes than many other stocks in the microchip and semiconductor space.
Curtis upgraded AMAT stock to a Buy rating from Hold, and lifted his price target on the shares to $195 from $185 previously. The new price target is about 35% higher than where Applied Materials shares are currently trading.
A Needed Boost
The upgrade and positive report is a much needed boost to AMAT stock, which has declined 30% over the last 12 months, including a 10% drawdown so far this year. Despite the poor performance, Curtis is confident that better days are ahead for Applied Materials and its shareholders.
Applied Materials, an engineering company that provides software and manufacturing equipment to the semiconductor industry, should benefit from improving macro conditions, including a recovery in demand for DRAM and NAND memory chips.
The analyst added that Applied Materials continues to see steady growth in service revenue and subscriptions that account for two-thirds of its recurring revenue. Curtis added that Applied Materials has less exposure to China than many of its peers, which is a positive in the current environment.
Is AMAT Stock a Buy?
The stock of Applied Materials has a consensus Moderate Buy rating among 22 Wall Street analysts. That rating is based on 17 Buy, four Hold, and one Sell recommendations issued in the last three months. The average AMAT price target of $205.38 implies 40.60% upside from current levels.
