Applied Materials (NASDAQ:AMAT) shares slipped on Friday after the semiconductor equipment company posted second-quarter results that missed estimates and issued weak guidance, leading to some Wall Street analysts to cut their price targets.
Mizuho analyst Vijay Rakesh lowered his per-share price target on Applied Materials (AMAT) to $160 from $180, noting that even though the company said it will deal with a $150 million impact from Covid-related constraints next quarter and the wafer fab equipment market is running below the potential $100 billion "unconstrained" levels, demand is still strong.
"[G]uidance implies 2023 [estimated] top-line expectations higher [year-over-year] as long-term capacity and technology roadmap remain intact, along with demand persistently strong," Rakesh wrote in a note to clients, adding that Applied Materials (AMAT) product roadmap leaves it "well positioned" despite some near-term issues.
Applied Materials (AMAT) shares fell more than 2% to $108.41 in premarket trading on Friday.
In addition, Rakesh noted that Applied Materials (AMAT) could start "targeted tool price increases" given that fuel, logistics and material costs have remain elevated.
The analyst noted that revenue related to foundry and logic still remain strong, accounting for more than 60% of wafer fab equipment, while revenue attached to the memory market, specifically DRAM, is weak, with DRAM down 18% sequentially and NAND down 9% sequentially.
Earlier this month, it was reported that Applied Materials (AMAT) and several of its competitors could be impacted if the U.S. Department of Commerce bans companies from selling advanced equipment to make semiconductors to Chinese firms.
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