Applied Materials Outperforms Despite Volatility, Says Wells Fargo

Applied Materials, Inc. AMAT reported better-than-expected fourth quarter earnings Nov. 16. Revenue grew 20 percent year-over-year.

The Analyst

Wells Fargo's David Wong initiated coverage of Applied Materials with an Outperform rating and $65 price target. 

The Thesis

Applied Materials will continue to see high growth in the near term, Wong said. (See Wong's track record here.) 

Wells Fargo projects the display equipment segment of Applied Materials will grow as the transition to OLED displays drives market growth, the analyst said. 

Fundamentally high volatility and the cyclical nature of the semiconductor equipment industry are key risks for the stock, Wong said. The electronic display markets are highly leveraged to smartphones and televisions, which creates both volume opportunity and demand volatility.

The Price Action

The stock is trading around 1 percent higher Wednesday and is down around 16 percent from its November highs.

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