Analyst Note| Abhinav Davuluri, CFA |
Wide-moat Applied Materials reported fiscal third-quarter results above management’s guidance, while guiding fiscal fourth-quarter revenue above our expectations. We note Applied and its peers have all called for strong growth in 2021, driven by record capital expenditure levels at TSMC and Intel as well as solid memory spending. Management expects Applied’s fourth-quarter revenue to be up 34% year over year at the midpoint, with momentum persisting into 2022. Consequently, we are raising our fair value estimate to $131 per share from $125. Shares look fairly valued at current levels.