Earnings Preview: Applied Materials
Monday May 15, 10:24 am ET
Applied Materials Seen Posting In-Line or Better Results for 2nd Quarter
NEW YORK (AP) -- Applied Materials Inc., the world's largest semiconductor production equipment maker, reports earnings for the fiscal second quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The Santa Clara, Calif.-based company surpassed Wall Street's estimates in its first quarter, but investors already expected solid results. For the second quarter, Needham analyst Robert Maire said orders are forecast to be up about 13 percent to 15 percent when compared with the first quarter.
"Though flat panel orders are expected to be lower for the next two quarters, manufacturers are set to start the next phase of capacity expansion in the second half of the calendar year," wrote Maire, who rates the company "Buy."
In addition to expanding consumer electronics, he added, corporate investment in information technology is also strengthening.
BY THE NUMBERS: Analysts, on average, are looking for earnings of 23 cents per share on sales of $2.14 billion, according to a poll by Thomson Financial.
The estimates include stock options costs.
ANALYST TAKE: Bank of America analyst Mark F. FitzGerald expects the company to report better-than-expected orders for April. The analyst rates the company "Neutral" with a target price of $17.85.
Merrill Lynch analyst Brett Hodess expects the company to report solid second-quarter results and provide a growth outlook.
"We believe visibility for order growth beyond the June/July quarter is improving for AMAT and its peers, Hodess wrote in a note to clients. "However, any good news from the conference call could already be discounted as investors remain concerned about a potential order slowdown" in the later half of the year.
WHAT'S AHEAD: In early May, the company agreed to buy Applied Films Corp. for $28.50 per share, or about $464 million. Applied Films makes thin film deposition equipment used in manufacturing flat panel displays, solar cells and flexible electronics.
Needham's Maire, said the deal complements AMAT's current flat panel efforts and open new markets for the company.
"We believe this technology tuck-in acquisition should be easily integrated given the relative sizes of the two companies," he wrote in a note to clients. "Traditional speed bumps such as corporate culture are likely a nonevent. We envision cost saving from a manufacturing, sourcing, and back office standpoint."
STOCK PERFORMANCE: The stock closed at $17.95 on April 28, the last trading day of the company's fiscal second quarter, down 5 percent for the quarter and up 10 percent for the fiscal year, which began in November. In the past 52 weeks, AMAT shares changed hands between $15.46 and $21.06. |
