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Why Applied Materials Stock Jumped 19% in January

By Chris Neiger – Updated Apr 24, 2019 at 10:29AM

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Analysts were more positive about the company last month, and investors took notice.

What happened

Shares of Applied Materials (AMAT -1.73%), a leading manufacturing and services company in the semiconductor industry, jumped 19.4% in January, according to data provided by S&P Global Market Intelligence. Two analysts spoke positively about the company during the month, and one upgraded Applied Materials' stock.

So what

Applied Materials' share price first jumped toward the end of last month after Citi analyst Atif Malik reshuffled some of his top stock picks in the semiconductor wafer fabrication industry, and noted that Applied Materials was his No. 2 pick, behind Lam Research. Investors may have been happier than usual to hear this positive sentiment about the company, considering that much of the news about the semiconductor industry had been bad in the months before.

Arrows on black background pointing upward.

Image source: Getty Images.

Applied's stock ticked up once again at the very end of January when RBC Capital Markets analyst Mitch Steves upgraded the company's stock to outperform and raised his price target from $38 to $45. Steves said that Applied would experience a "soft and slow recovery" in the third quarter.

It's also likely that investors were optimistic about Applied Material's prospects after semiconductor maker Texas Instruments beat analysts' expectations its most recent quarterly results in January, which indicated strong demand for the industry overall.

Check out the latest Applied Materials earnings call transcript

Now what

Applied Materials' stock has risen about 1% since the beginning of this month, but that could change soon as the company is scheduled to report its first-quarter results on Feb. 14. Management is expecting sales in the range of $3.5 billion to $3.8 billion, which would be a drop of about 12% from the year-ago quarter, at the midpoint. Earnings per share are expected to slide as well, to a range of $0.75 to $0.83, down 25% at the midpoint.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of Texas Instruments. The Motley Fool recommends Lam Research. The Motley Fool has a disclosure policy.

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