Upgrades for AMAT and LRCX. I chuckle at how they upgrade at record highs and the two downgrades are for the laggards.
Applied Materials replaces GlobalFoundries in Cantor's top 5 list ahead of earnings season
seekingalpha.com
Apr. 08, 2024 10:41 AM ET
Applied Materials, Inc. (AMAT) Stock INTC, STX, TXN, WDC, NVDA, QCOM, LRCX, MU, TSM, ASML, KLAC, SOX, NXPI, GFS
By: Ravikash Bakolia, SA News Editor
Cantor Fitzgerald upgraded Applied Materials (NASDAQ:AMAT) to Overweight and downgraded GlobalFoundries (GFS) to Neutral ahead of the quarterly earnings season.
The firm remains Overweight on Semiconductors and Semiconductor Equipment industry.
A team of analysts led by C.J. Muse said that secular tailwinds from AI, along with cyclical recovery elsewhere combined with being only four quarters into the recovery (versus the average typical cycle of nine quarters before reaching the next fundamental peak), tells them that there remains more upside for the group.
However, this does not include the potential for "more exuberance" related to AI, the analysts added.
Cantor noted that its five best names for full year 2024 as of Jan. 22 were Nvidia (NVDA), Western Digital (WDC), ASML (ASML), NXP Semiconductors (NXPI), and GlobalFoundries (GFS).
The analysts noted that since Jan. 22, these five stocks are up an average of +20% versus Philadelphia Semiconductor Index (SOX) +11%, with all but GlobalFoundries outperforming the broader Semi Index.
However, Muse and his team have now added Applied Materials (AMAT) and removed GlobalFoundries to the list.
Cantor's new top picks list now consists of Nvidia, Western Digital, ASML, NXP Semiconductors and Applied Materials.
The firm upgraded Applied Materials to Overweight from Neutral and raised the price target to $260 from $220.
Muse and his team expect positive spending reads from Taiwan Semiconductor Manufacturing (TSM) Capex and ASML (ASML) orders to be a rising tide for SPE – add-in excellent leverage to secular opportunities within the space (i.e. High Bandwidth Memory, or HBM, Advanced Packaging, GAA, and Backside Power, among other things) and they see a clear path to share gains and 2025 earnings power approaching $11 in a $110B wafer fab equipment, or WFE, world.
Cantor downgraded GlobalFoundries' stock to Neutral from Overweight and set a $55 price target down from $70.
The analysts noted that, with expectations for only a gradual recovery to both top-line and margins, and any strategic benefit from Intel (INTC) unlikely until 2025 at the earliest, they are hard-pressed to see any meaningfully positive catalysts to lift shares higher in 2024.
Cantor's Best Tactical Ideas into Earnings: The analysts are Long on Nvidia, Western Digital, ASML, NXP Semiconductors (and see likely rising tide for KLA (KLAC) Lam Research (LRCX) and Applied Materials) NXPI, and Qualcomm (QCOM).
The analysts see Intel and GlobalFoundries as relative underperformers as well as most of Analog, and see Long Western Digital/short Seagate Technology (STX) as an excellent pair trade.
In addition, Cantor has raised its price targets for Western Digital ($100 from $70); Applied Materials $260 from $220; ASML (€1,150 from €900); NXP Semiconductors ($290 from $270); Micron Technology (MU) ($150 from $135); KLA ($800 from $$625); Lam Research ($1,100 from $900); Qualcomm ($190 from $150); and Texas Instruments (TXN) $180 from $170.
The firm reduced its price targets on Intel ($45 from $50) and GlobalFoundries ($55 from $70).
Applied Materials (AMAT) has a Hold rating at Seeking Alpha's Quant Rating system, which consistently beats the market. Meanwhile, the Seeking Alpha authors' average rating is more positive with a Buy and so is the average Wall Street analysts' rating, Buy. |
