Applied Materials No-Politics Thread (AMAT) Message Board

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Technology Stocks : Applied Materials No-Politics Thread (AMAT)

AMAT 226.05

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Nov 14 9:30 AM EST

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To: The Ox who wrote (10385)	6/16/2004 9:31:53 AM
From: Proud_Infidel	Read Replies (2) of 25522

Multiples are going to contract from their lofty levels of 12 or so for the SCE group......why doesn't an EBAY with a PSR of 24 get even a fraction of the attention of this group? Not a cyclical company yada-yada-yada...... Would Higher Rates Help Semi Stocks? 06.16.04, 9:15 AM ET Prudential Equity Group said it examined 20 years of data to assess historical correlations between interest rates, stock multiples and year-over-year revenue growth rates in the semiconductor group. The research outfit concluded that historically, there has been an inverse correlation between interest rates and semiconductor stock price multiples, but an even stronger positive correlation between year-over-year revenue growth and stock prices. "We think revenue growth trumped the historical inverse relationship between interest rates and semi stock multiples during the last cycle, and may be leading some investors to the (in our opinion) incorrect conclusion that rising rates will be positive for semi stocks," the firm said. Prudential predicted that over the next six months year-over-year industry revenue growth will decelerate and interest rates will increase. "We think this will limit the prospect for multiple expansion, if not result in multiple contraction for the group," the firm said. Given that scenario, Prudential predicted that earnings results and revisions will be primary drivers of stock performance. The firm reiterated "overweight" ratings for Intel (nasdaq: INTC - news - people ) and Broadcom (nasdaq: BRCM - news - people ).

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