Applied Materials Stock Gets Price-Target Boost While Analyst Turns Cautious On Lam Research: Here's Why

KeyBanc Capital Markets analysts took contrasting stances toward semiconductor equipment makers Applied Materials, Inc. (AMAT) and Lam Research (LRCX). Both stocks climbed strongly on Monday, capitalizing on ratings upgrades from Morgan Stanley and the broader strength of the tech industry.

In early premarket trading on Tuesday, Applied Materials stock edged down 0.24%, while Lam Research stock fell 1.17%.

On Stocktwits, retail sentiment toward both chip-equipment makers remained 'bullish,' with the optimism accompanied by 'high' message volume.

KeyBanc Capital Markets analysts maintained an 'Overweight' rating for AMAT stock and hiked the price target to $220 from $200, according to a summary of the investor note on The Fly. The analysts noted that the stock has lagged its peers for the year-to-date, creating a favorable risk-reward setup. AMAT is up about 24% this year compared to an 84% jump for Lam Research

The research firm attributed Applied Materials' relative underperformance to concerns about headwinds from mature node technologies, particularly in China. Even as the company faces similar leading-edge catalysts as its peer group, investor sentiment is muted, it added.

KeyBanc, however, downgraded Lam Research to 'Sector Weight' from 'Overweight' without a price target. The firm believes strong memory pricing may take time to drive new tool demand. 

According to the firm, Lam's near-term earnings upside may not support the "sizable" recent rally in the shares, the analyst tells investors in a research note. The firm recommended AMAT stock over Lam Research stock for investors seeking exposure to the memory industry.

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