Applied Materials (AMAT) is one of the world’s largest suppliers of fabrication equipment to semiconductor, LCD and solar PV cell manufacturers. Applied Materials’ third quarter results exceeded estimates, but guidance disappointed, due to utilization cuts at DRAM, NAND and foundry customers. Therefore, we think the shares will underperform in the near term.

Add to this a peaking cycle, the recent increase in debt and issuers in the TV market and we can expect significantly lower earnings. We are therefore downgrading AMAT shares from Neutral to Underperform.

We think the trend is moving downward rather than upward, not just because of our earnings growth expectation for Applied Materials, which is slightly lower than the peer group, but also because of recent adverse conditions in the market and the cyclical peaking.

APPLD MATLS INC (AMAT): Free Stock Analysis Report

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