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http://www.businessweek.com/stories/2003-11-12/banc-of-america-keeps-neutral-on-applied-materials

Markets & Finance

Banc of America Keeps 'Neutral' on Applied Materials


Banc of America keeps its neutral rating on Applied Materials (AMAT).

Analyst Mark FitzGerald says order growth exists, which is pleasing for those investors who are momentum junkies. October orders grew 20%, vs. his 10% estimate. FitzGerald estimates fiscal 2004 (Oct.) earnings per share need to be in the $1.00 range to support the current stock price. To accomplish this, Applied Materials must show a top-line surprise, or show better leverage: He has very aggressive assumptions for both.

FitzGerald thinks order momentum for the chip-equipment maker could stall by the middle of 2004 unless there's a 1990s type of end-market recovery. He thinks valuation will matter when momentum stalls. Also, FitzGerald says the stock is expensive, and he has a $21 target, which gives shares a price-earnings of 34, based on his 62 cents earnings per share estimate for 2004.


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