From H&Q. Jeff
<<
**** Chase H&Q **** Chase H&Q **** Chase H&Q ****
Company: Applied Materials, Inc.
Price: 72.12
Recommendation: Buy
Notes: a, f
Date: 8/10/00
1 of 3 Near-term momentum waning, long-term outlook very positive.
* The company reported Q3F00 EPS of $0.70 on revenues of $2.73 billion,
bettering the street consensus of $0.68 and our revenue and earnings estimates
of $2.65 million and $0.65, respectively. Quarterly bookings grew to $3.28
billion, creating a 1.2:1 book-to-bill.
* For Q4F00 and F01 we are increasing EPS estimates to $0.75 and $3.65 from
$0.73 and $3.48, respectively, while maintaining our previous top line figures.
* Overall the Applied call provided some solid evidence that the current
semiconductor cycle has not come to an end. Management expects capital
expenditure increases at several leading semiconductor companies next year,
and supported our view that the DRAM spending cycle has yet to kick in. 12 to
18 month outlook remains rosy.
* Quarterly results essentially fell in line with expectations. Q4F00
guidance of only 6.7% sequential bookings growth continues to show a declining
growth rate. While we are tweaking estimates, the change is relatively small
in magnitude.
* Although near-term data points for the capital equipment industry to likely
remain sluggish, we continue to believe that fundamentals for the industry on
a bookings momentum basis could improve substantially around Q4C00. Therefore,
in our opinion, the current share prices provide an excellent opportunity for
meaningful share appreciation within the next 6 months. |
