By Emily Dattilo
Shares of Applied Materials were falling Friday after the chip equipment maker issued mixed financial guidance.
Applied Materials stock fell 5% to $175 in premarket trading. Chip maker stocks were also in the red, with Lam Research down 1.3%, while KLA Corp. was 0.7% lower.
Late Thursday, the company reported adjusted earnings of $2.38 per share for its first fiscal quarter ended Jan. 26, beating Wall Street's call for $2.28, according to FactSet. Net revenue of $7.17 billion was above the consensus estimate of $7.15 billion.
"We delivered strong financial performance in the first fiscal quarter, with record revenue, gross margin expansion and robust shareholder distributions," said Chief Financial Officer Brice Hill in the earnings release.
One of those metrics was highlighted by William Blair analysts Jed Dorsheimer and Mark Shooter, who rate Applied Materials at Market Perform. "Gross margin reached 48.9%, a level not seen in 25 years, from strong demand and continued value pricing," they wrote.
For its fiscal second quarter, Applied Materials forecasts revenue of $7.1 billion, plus or minus $400 million, and adjusted earnings per share of $2.30, plus or minus 18 cents. Analysts had penciled in revenue of $7.22 billion and earnings of $2.29. The guidance includes "the estimated impact of recently announced U.S. export regulations," the company said.
KeyBanc Capital Markets analysts led by Steve Barger, who rate Applied Materials at Overweight with a price target of $225, offered an opinion on the financial outlook. "We think this guidance profile mirrors what we've seen from other names and expect it reflects some conservatism around this slowly evolving cycle," they wrote.
Write to Emily Dattilo at emily.dattilo@dowjones.com
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February 14, 2025 08:19 ET (13:19 GMT)
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