UPDATE 3-RESEARCH ALERT-Solar, new customers seen powering AMAT

(Recasts, adds BofA comments, updates share price)

Nov 9 (Reuters) - Citigroup upgraded Applied Materials Inc (AMAT.O), the top supplier of chip-making equipment, while Banc of America kept its "buy" rating, expecting Applied to gain from new customers and strong solar orders.

Shares of Applied, which targets solar energy as a big growth area, were up about 6 percent at $19 in afternoon Nasdaq trade.

Raising Applied to "buy" from "hold," Citigroup expects fiscal 2009 earnings per share to jump, powered by $1 billion-plus of solar orders in fiscal 2008, and expectations of memory chip customers reviving capital expenditure around mid-2008.

Citigroup, which expects Applied to post an EPS of about $1.50 in fiscal 2009, raised its price target on the stock by $1 to $23.

Banc of America Securities, maintaining its "buy" rating and $25 price target on the stock, said new customers were signing up, with at least 15 to 20 potential customers in the contract pipeline.

"FY07 was a contracts story, FY08 will be about bookings," said BofA analyst Mark FitzGerald in a Nov. 8 note, adding he expects SunFab thin film bookings alone to reach about $2 billion in fiscal 2008.

In September, Applied introduced SunFab products, which are for thin-film silicon panels four times larger than the ones commonly available.

The new panels would have a lower production cost per watt to reduce the price of solar electricity, the company said. (Reporting by Esha Dey in Bangalore, Editing by Mathew Veedon)