Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 328.51

+1.9%

3:59 PM EST

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To: FR1 who wrote (36267)	8/4/2000 2:56:24 PM
From: Sun Tzu	of 70976

Essentailly what they are saying is that in their opinion, AMAT will be earning $3.83 in the calendar year 2001. And that again in their opinion, a PE of 25 is fair value for AMAT. Therefore the price target for AMAT must equal $95=3.83x25). How do they know AMAT will earn $3.83? One part company guidance, two parts top-down analyst forecast, three parts peer comparison, all fed through a random number generator a.k.a bottom up analyst. Why do they think 25x is a fair price? A similar process as above, only replace company guidance with historical multiples. hope this helps, ST PS Did they change their earnings forecast or only their multiple?

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