Pro: Applied Materials stock is not attractive despite upbeat guidance

on Feb 17, 2023
Updated: Jun 21, 2024
  • Applied Materials issues encouraging guidance for the future.
  • Boris Schlossberg shares his view on Applied Materials stock.
  • Shares of the company are already up about 20% for the year.

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Applied Materials Inc (NASDAQ: AMAT) is trading slightly up in extended hours after reporting its financial results for the first quarter that topped Street estimates.

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Applied Materials stock up on solid guidance

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More importantly, management expressed confidence today that the company will outperform this year even though the industry at large is still facing challenges. For Q2, Applied Materials now forecasts $1.66 to $2.02 of adjusted per-share earnings on $6.40 billion (mid of the range) revenue.

In comparison, analysts were at $1.76 a share and $6.29 billion, respectively. In the earnings press release, CEO Gary Dickerson said:

Our resilience is underpinned by our strong positions with leading customers at key technology inflections, large backlog of differentiated products and growing service business.

Notable figures in Applied Material’s Q1 report

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  • Earned $1.72 billion versus the year-ago $1.79 billion
  • Per-share earnings nudged up slightly from $2.0 to $2.02
  • Adjusted for nonrecurring items, EPS printed at $2.03
  • Revenue jumped 7.0% year-over-year to $6.74 billion
  • Consensus was $1.93 per share on $6.69 billion revenue

Is now a suitable time to buy AMAT?

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Despite the upbeat results and outlook, however, Boris Schlossberg of BK Asset Management does “not” recommend owning Applied Materials stock. On CNBC’s “Power Lunch”, he said:

It’s gotten too far ahead of itself. It’s possible for semiconductor demand to be strong but not have the need for capex. So, it’s possible for the semiconductor industry to be doing well but AMAT not necessarily.

For the year, the semiconductor stock is already up about 20%. Schlossberg likes the company for the long-term but recommends that investors wait for a pullback to around $100 a share before building a position.

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