Applied Materials, Inc. (AMAT) is set to increase earnings leverage and regain the top place in the equipment industry with strategies put in place by the company’s new first-rate management team, says Patrick Ho, Analyst at Stifel Nicolaus & Co., Inc.
“Applied Materials still will trade along the general trends of the group and how its peers move, but on a potential three- to five-year basis, there is a company-specific story that I believe provides with the most upside opportunity over an extended period of time…they’ve brought in new leadership, and leadership that I have a significant amount of trust and confidence that they will get the company lighted and to a point where I believe they’ll become an outperformer and a leader in the industry once again,” Ho said.
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AMAT‘s team is let by Gary Dickerson, who as President is one of the most respected executives in the semi-cap industry, and CFO Bob Halliday, one of the best in the semi-cap industry and the technology industry as a whole, Ho says. Ho is confident that the new management’s track record will bring significant opportunities to Applied Materials and position the company to be back on top in the equipment industry.
“I believe as they continue to execute their strategies, they’ll have a significant opportunity to increase their earnings leverage, particularly when you compare it to a lot of their peers in the industry. I don’t believe that there is a company that can deliver the earnings leverage that Applied could over the next two to four years, if they execute their strategy successfully,” Ho said.
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