Yahoo Finance Applied Materials, Inc. (NASDAQ:AMAT) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year
Last week, you might have seen that Applied Materials, Inc. (NASDAQ:AMAT) released its second-quarter result to the market. The early response was not positive, with shares down 3.3% to US$52.04 in the past week. Revenues of US$4.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.82, missing estimates by 2.3%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Applied Materials
Following the latest results, Applied Materials' 26 analysts are now forecasting revenues of US$16.6b in 2020. This would be an okay 7.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to step up 15% to US$3.65. Before this earnings report, the analysts had been forecasting revenues of US$16.1b and earnings per share (EPS) of US$3.43 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$68.50, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Applied Materials analyst has a price target of US$85.00 per share, while the most pessimistic values it at US$52.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Applied Materials' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Applied Materials' revenue growth will slow down substantially, with revenues next year expected to grow 7.6%, compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.1% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Applied Materials.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Applied Materials' earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$68.50, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Applied Materials analysts - going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Applied Materials that you should be aware of.
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