After the bell yesterday (Tuesday, August 12th), semiconductor/solar play Applied Materials (AMAT) reported slight upside to both EPS ($0.15 vs. $0.14 consensus) and revenue ($1.85 billion vs. 1.84 billion consensus).
The guidance for AMAT’s October quarter was weak, though. Revenue guidance was weak: up 6% +/- 4% at $1.960 billion +/- $0.074B (vs $2.020 billion consensus), but AMAT only expects EPS of $0.12 – $0.15 (0.19 consensus). AmTech was unimpressed:
While the strong snap-back in semi orders and solar orders is increasingly becoming a more significant part of Applied’s overall business, near-term earnings are adversely impacted by ramp-up costs to support the solar business. The stock recently recovered from its near-term trough of $16.70 in late July, and while near-term orders have improved, earnings growth is more muted, likely keeping Applied’s stock range-bound at $18-19. Furthermore, with the stock currently trading about 3x Price/Sales it reflects more of a mid-cycle valuation versus the historical trough of 2.0x P/S.
AmTech maintains NEUTRAL on Applied Materials (AMAT).
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