Applied Materials Records Record Revenue and Earnings for FY 2023

Mizuho's Vijay Rakesh raised their price target on Applied Materials (NASDAQ: AMAT) by 3.1% from $162 to $167 on 2023/11/17. The analyst maintained their Strong Buy rating on the stock.

After the release of Applied Materials' fourth-quarter and fiscal year 2023 earnings report on November 16, 2023, Rakesh informed investors that the quarter was "good" and management expects "China to be stable in 2024."

Applied Materials, a provider of manufacturing equipment, services, and software to the semiconductor, display, and related industries, reported strong financial results for the fourth quarter of 2023. The company exceeded expectations with earnings per share (EPS) of $2.12, beating the Zacks Consensus Estimate by 7.1% and surpassing the previous year's fourth-quarter EPS of $2.03 by 4.4%. Revenue for the quarter stood at $6.72 billion, beating the Zacks Consensus Estimate of $6.52 billion. However, it fell slightly short of the previous year's fourth-quarter revenue of $6.75 billion by 0.4%. The gross margin also improved, reaching 47.1% compared to the previous year's 45.9%. Operating expenses increased to $1.198 billion from $1.107 billion in the fourth quarter of 2022.

For the fiscal year 2023, Applied Materials reported EPS of $8.05, a 4.5% increase compared to the previous year's $7.70. Revenue for the fiscal year reached $26.52 billion, a 2.8% jump from the previous year's $25.79 billion. The gross margin also saw a slight improvement, reaching 46.7% compared to the previous year's 46.5%. Operating expenses increased to $4.73 billion from $4.21 billion in fiscal year 2022.

In addition to the financial results, Applied Materials announced a distribution to shareholders consisting of $700 million in stock repurchases and $268 million in dividends for the fourth quarter of 2023. For the fiscal year 2023, the distribution amounted to $2.19 billion in stock repurchases and $975 million in dividends.

Looking ahead to the first quarter of 2024, Applied Materials' management provided guidance. They expect EPS in the range of $1.72 to $2.08, with a consensus estimate of $1.85. Revenue is anticipated to be between $6.37 billion and $6.41 billion, with a consensus estimate of $6.39 billion. The company also expects a gross margin of 47% and operating expenses of $1.23 billion.

President & CEO Gary Dickerson expressed confidence in Applied Materials' future prospects, stating, "Applied’s broad product portfolio, strong customer relationships and leadership at major technology inflections put us in a great position to profitably grow the company as powerful trends fuel the semiconductor industry’s expansion in the years ahead."

Following the earnings report, other analysts also provided updates on Applied Materials. Harlan Sur from JP Morgan raised their price target by 3%, from $165 to $170, and maintained their Strong Buy rating on the stock. Joseph Moore from Morgan Stanley raised their price target by 2.2%, from $139 to $142, and maintained their Hold rating on the stock.

According to data from WallStreetZen, 81.3% of top-rated analysts currently rate AMAT as a Strong Buy or Buy, while 18.8% consider it a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Applied Materials will achieve earnings per share (EPS) of $8.06 for the upcoming year. If the analysts' predictions hold true, the next yearly EPS will increase by 5.8% on a year-over-year basis.

Since the release of Applied Materials' quarterly report on November 16, 2023, the stock price has experienced a 4% decline. However, year-over-year, the stock has risen by an impressive 42.3%. During this period, Applied Materials has outperformed the S&P 500, which has seen a growth of 15.2%.

Mizuho analyst Vijay Rakesh, who raised the price target on Applied Materials to $167, is ranked in the top 1% out of 4,402 Wall Street analysts by WallStreetZen. Rakesh specializes in the Technology and Consumer Cyclical sectors and has an average return of 14.6% with a 55.9% win rate.

Applied Materials, Inc., headquartered in Santa Clara, California, was incorporated in 1967. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment used in fabricating semiconductor chips or integrated circuits. The segment also offers a range of technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for the manufacturing of liquid crystal displays, organic light-emitting diodes, and other display technologies used in TVs, monitors, laptops, personal computers, electronic tablets, smartphones, and other consumer-oriented devices.

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