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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (55326)	11/10/2001 4:51:57 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

11/9/01 Brett Hodess, ML: The rate of order declines is slowing to a trickle as we approach an 75% drop from the peak. We believe that as orders stabilize, albeit at a low level, the stock will make a floor above the trough price set when orders were in free fall. For Applied, this downside level is in the low $30 range in our opinion, or about 3.5x price to book. The stock reached 2.8x price to book for only a few days at the trough (in-line with the 1998 trough). If the recovery begins during 2H 2002, an average recovery scenario would allow Applied to reach $2.00 annualized EPS run rate about a year later. Applying a historical growth P/E of 30x (1x the long term CAGR earnings growth rate) at some point in the next 12 months, the stock could trade to $60. This provides a 2 to 1 risk reward ratio on Applied over the next 12 months. Thus, we maintain our 1-1 rating on the stock.