"Street Chatter" from Schaeffer's Investment Research
<<CINCINNATI--(BUSINESS WIRE)--May 19, 2004--Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Applied Materials (Nasdaq:AMAT), Network Appliance (Nasdaq:NTAP), and Research in Motion Limited (Nasdaq:RIMM).>>
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<<Yesterday evening, all eyes were on Applied Materials (Nasdaq:AMAT) as the semiconductor concern ventured into the earnings confessional and announced second-quarter results of 22 cents per share, three cents beyond the consensus estimate on Wall Street. Sales surged 82 percent at the firm and new orders climbed 127 percent, giving the firm its heftiest profit in three years. AMAT officials say the recovery in the semiconductor market should continue, and the firm targets third-quarter earnings per share between 23 and 25 cents. Spoiling the stock's party a little was UBS, which lowered its rating on the shares to a "neutral" from a "buy." Prior to this downgrade, AMAT was designated as a "buy" at 17 of the 23 firms covering the shares.
AMAT is shaking off today's downgrade and has rallied nearly two percent. From a longer-term perspective, the security has been declining since early November, losing about one-quarter of its value over the past six months. What's more, AMAT continues to trade beneath its 10-week and 50-week moving averages, trendlines that recently completed a bearish crossover.
Despite the stock's less-than-impressive price action, options players have become more optimistic toward AMAT, as evidenced by the equity's declining Schaeffer's put/call open interest ratio (SOIR). The sentiment indicator currently weighs in at 0.60, which is lower than 81 percent of all readings taken over the past year. A relatively low SOIR indicates that optimism is the prevalent sentiment among options players. Additionally, the stock's paltry short-interest ratio of 1.0 means that there is little chance that a short-covering rally could aid the shares in the near future.>>
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