In today’s briefing:
- Applied Materials ICAPS Grows Strongly But Leading Logic Ruins The Party
- US Regional Banks – Credit Spread Silver Linings to Mitigate Loan Quality and Volume Headwinds
- HWKN: One-Time Gain Hides Miss
Applied Materials ICAPS Grows Strongly But Leading Logic Ruins The Party
- Q1’23 revenues of $6.63 billion, up 6 % YoY, down 2% QoQ
- Q2’23 revenues of $6.15 billion at the midpoint, down 7.2% QoQ.
- Tool push outs and cancellations are spreading to leading logic customers. That’s not a good sign
US Regional Banks – Credit Spread Silver Linings to Mitigate Loan Quality and Volume Headwinds
- US banks tightening standards for loans, as well as the downturn in loan demand, provides a silver lining for banks by reducing funding pressures as well as the increasing spreads
- Among the regional banks, Western Alliance is seeing deposit inflows in 2Q23; more generally, the usage of the Fed’s BTFP and issuance by the FHLB seem well controlled
- We stick with our picks M&T Bank and Western Alliance, adding First Horizon to the buy list, where valuations stand out along with solid capital ratios and above average returns
HWKN: One-Time Gain Hides Miss
- HWKN reported Q4 (April 2) results at first read suggesting beating estimates. However, demand has been declining and EPS beat our forecast due to one-time gain on an asset sale
- The competitive environment has intensified in recent quarters where imports are being offered at lower prices while HWKN faces higher costs
- We have changed our fiscal 2024 estimates to incorporate reduced sales from the asset sale, longer timeline in gross margin improvement, and the industrial segment facing competition
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