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.