Applied Materials Exceeds Q1 Expectations; Shares Rise 2.3%

Shares of Applied Materials, Inc. (AMAT) rose 2.3% in Wednesday’s extended trading session after the company reported better-than-expected fiscal first-quarter 2022 results.

The company provides manufacturing equipment, services, and software solutions to the semiconductor, display, and related industries to produce new chips and advanced displays.

Q1 Performance

The company’s adjusted earnings of $1.89 per share grew 36% year-over-year and exceeded analysts’ expectations of $1.86 per share. AMAT had reported earnings of $1.39 per share in the same quarter last year.

Net sales jumped 21% year-over-year to $6.27 billion, which surpassed consensus estimates of $6.17 billion. The upside can be attributed to higher revenue in Semiconductor Systems and Applied Global Services segments.

Meanwhile, operating margin came in at 31.5% against 24.9% in the prior-year quarter. Applied Materials generated about $2.66 billion in cash from operations in the first quarter.

The President and CEO of Applied Materials, Gary Dickerson, said, “While the supply environment remains challenging, Applied Materials is doing everything we can to deliver for our customers and we recorded our highest-ever quarterly revenues. Our outlook for 2022 and beyond is very positive as long-term secular trends drive our markets structurally higher and Applied’s broad technology portfolio puts us in a great position to capture a larger portion of our served markets.”

Guidance

In the second quarter of fiscal 2022, the company forecasts adjusted earnings in the range of $1.75 per share to $2.05 per share. Revenues are forecast to be $6.35 billion — with a possible variation of plus or minus $300 million that includes the expected impact of ongoing supply chain challenges.

Wall Street’s Take

Following the first-quarter results, Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating on the stock with a price target of $180 (27.7% upside potential). The analyst sees AMAT well positioned with a strong product roadmap and market leadership.

Consensus among analysts is a Strong Buy based on 15 Buys and 5 Holds. The average Applied Materials price target of $179.44 implies 27.3% upside potential.

Positive Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Applied Materials, with 8.4% of investors increasing their exposure to AMAT stock over the past 30 days.

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