Scalper1 News
Chip gear-maker Applied Materials ( AMAT ) is expected late Thursday to report its ninth consecutive quarter of $2 billion-topping sales, and shares rose Wednesday on the pending Q1 report. Intraday on the stock market today , Applied Materials stock was up 2.5%. Shares are down 10% for the year, reflecting an equal drop in IBD’s 36-company Electrical-Semiconductor Equipment industry group. Applied Materials stock closed 2015 down 25%. For Q1, Applied Materials is expected to report $2.24 billion in sales and 25 cents earnings per share ex items, down 5% and 7%, respectively, vs. the year-earlier quarter. The consensus model of 22 analysts polled by Thomson Reuters was in line with Applied Materials’ three-months-earlier guide for a 2%-9% sequential decrease in sales ($2.16 billion to $2.32 billion) and 23-27 cents EPS minus items. Credit Suisse analyst Farhan Ahmad doesn’t expect any surprises when Applied Materials reports late Thursday. In November, CFO Robert Halliday guided to a 7%-13% decrease in silicon systems, flat installation/warranty support and a 5%-15% jump in display sales. “While display could disappoint near term, we expect positive commentary around the OLED (organic light-emitting diode) ramp at Samsung/LG Display,” Ahmad wrote in a research report. He views Applied stock “as the best self-help story” in semiconductors. OLED displays don’t have a backlight and are therefore thinner than traditional LCDs (liquid crystal displays). The material is used in TVs, computer monitors, smartphones and handheld game systems. Applied Materials cushioned itself for macro uncertainty with a $3 billion buyback program, adding an estimated 12 cents EPS minus items accretion in 2016, Ahmad wrote. He forecasts gross margin improvement in the July quarter vs. 42.2% in the past October quarter. Ahmad retained his outperform rating and 22.50 price target on Applied Materials stock. Applied Materials has a middling IBD Composite Rating of 72 out of a highest-possible 99, and trails Cascade Microtech ( CSCD ), KLA Tencor ( KLAC ) and Advanced Energy ( AEIS ) with CRs of 99, 97 and 94, respectively. Lam Research ( LRCX ) is acquiring KLA Tencor, forming a combination that some analysts say could punt Applied Materials from its top chip gear-making spot. Scalper1 News
Scalper1 News