Needham Analyst N. Quinn Bolton cut the price target on Applied Materials from $125 to $90 and keep a purchase. Last night, AMAT announced that it was lowering its Q4 FY22 revenue and EPS guidance by $250 million and $0.35, respectively, on recently announced actions Export Control Measures.
The total impact of the new US export restrictions implemented on October 7 for 14 and 16nm and below Advanced Logic, 128L and above NAND, and 18nm half-pitch and below DRAM is expected to be $400m +/- $150m.
More robust shipments outside of China partially offset the impact as component supply improved during the quarter. Although the approximately $400 million impact is attributable to just one month of the fourth quarter, AMAT expects a similar effect for the entire first quarter of FY23.
Bolton lowered its FY23 revenue estimate by $1.9 billion to reflect the impact of restrictions and upcoming weak demand.
Wells Fargo Analyst Joe Quatrochi had an Overweight rating and a price target of $100. After the close on Oct. 12, Applied Materials revised its Q4 guidance following US export restrictions on semi-equipment and related parts and services.
AMAT’s revenue guidance is now $6.4B +/- $250B compared to the previous guidance of $6.65B +/- $400M. Its previous estimate was $6.67 billion (Street: $6.66 billion).
AMAT’s updated non-GAAP EPS guidance is now $1.54-$1.78 compared to the previous $1.82-$2.18 (vs its last $2.02; Street $2.00).
AMAT noted that a fee of $0.23 per share or ~$200 million is included for the initial estimated impact of inventory and remanufacturing fees related to the export restriction.
The price target reflects Quatrochi’s belief that stocks should trade at a moderate premium Lam Research Corp LRCX given higher exposure and market share in Foundry and Logic.
Price promotion: AMAT shares traded 4.35% higher at $79.32 on the last check Thursday.
