The stock of Applied Materials (AMAT) has been upgraded to a Buy-equivalent rating at KeyBanc Capital Markets on growing hopes for a rebound in microchip equipment companies.
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Steve Barger, a five-star rated analyst at KeyBanc, has raised his rating on AMAT stock to overweight from a sector weight (Hold) rating previously, and established a price target on the shares of $225, which is nearly 20% higher than current levels.
“We think AMAT’s broad diversification, focus on novel materials, and leading market share in technologies enabling node transitions, improved chip efficiency, and advanced packaging position it well for an (artificial-intelligence)-driven growth cycle,” wrote Barger in a note to clients.
A Rebound for AMAT Stock?
AMAT stock has declined almost 30% since July of last year, compared to a 6% gain in the benchmark S&P 500 index over that period of time. However, the outlook for companies such as Applied Materials that make the equipment needed to produce microchips and processors is improving amid the artificial intelligence (AI) boom, says Barger.
The KeyBanc analyst stresses that a recovery in Applied Materials and other chipmaking equipment makers should be anticipated in the year ahead, and he encourages long-term investors to grab shares before the stocks takeoff. AMAT stock has been flat over the past three months, rising only 0.30%.
Is AMAT Stock a Buy?
The stock of Applied Materials has a consensus Moderate Buy rating among 21 Wall Street analysts. That rating is based on 14 Buy, six Hold, and one Sell recommendations assigned in the last three months. The average AMAT price target of $210.26 implies 12.75% upside from current levels.
