Applied Materials posted record revenue and earnings per share in the third fiscal quarter. Revenue for the reporting quarter ended August 1 amounted to $ 6.2 billion, which is 41% higher than the level of the same period last fiscal year. The company’s net profit more than doubled – to $ 1.72 billion from $ 841 million a year earlier. Earnings per share jumped to $ 1.87 from $ 0.91, while earnings excluding one-off factors jumped to $ 1.9 from $ 1.06. The numbers exceeded both management expectations and market consensus.
TIKR
AMAT
PRICE
$127
TARGET PRICE
$175
UPSIDE
38%
Management notes that long-term trends, supported by the digital transformation of the global economy, continue to drive strong demand for semiconductor products. According to the company’s forecast, in the current quarter its revenue will be $ 6.33 billion plus or minus $ 250 million, adjusted earnings – $ 1.87-2.01 per share. The consensus forecast of analysts for the revenue of Applied Materials for the fourth financial quarter is $ 6.04 billion, for profit excluding one-time factors – $ 1.81 per share.
Applied Materials is benefiting from significant growth in chip demand during the COVID-19 pandemic, and the company sees new opportunities for growth, marking a leap in chip production for automobiles. Applied Materials is set to see significant sales and operating profit growth in fiscal 2021 ending in October, driven by strong demand for its advanced chip manufacturing tools. Demand from DRAM customers like Samsung may rebound this year, while demand from customers like TSMC will remain strong. Applied Materials’ unique business model as a high-tech semiconductor material solutions provider will continue to generate ROI of up to 40%.
AMAT is the top semiconductor equipment supplier catering to most major verticals, other than lithography. Its semiconductor business typically represents ~65% of total revenue (excluding services). The company is also diversified beyond semiconductors and is a major supplier of equipment to build flat panel displays (LCD) and an increasingly larger participant in the emerging OLED space.