- Applied Materials (AMAT +1.1%) has been upgraded to Overweight by JPMorgan. The firm cites AMAT's chip equipment market positioning, optimism about a healthy market up-cycle, and a belief the Tokyo Electron (TOELF) merger will close in 2014.
- Like others, JPM is upbeat about the synergies that will come from a merger set to create a company controlling ~1/4 of the global chip equipment market. "Management teams at both companies remain on focus to drive meaningful cost synergies post-deal closure and drive solid profit margin expansion and EPS growth over the next 18 - 24 months."
- AMAT now +32% YTD, aided by solid order growth, expectations for rising orders from memory and logic/foundry clients amid investments in new processes (3D NAND, FinFET, etc.), and a belief industry consolidation will strengthen the hand of equipment vendors.
- The industry's Semicon West conference starts tomorrow. Credit Suisse expects AMAT and peers to offer upbeat commentary for both 2H14 and 2015 demand. Berenberg is more cautious, arguing conservative spending from Intel, Samsung, and TSMC presents downside risk.