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Investors in Applied Materials, Inc. (NASDAQ:AMAT) had a good week, as its shares rose 3.2% to close at US$72.81 following the release of its annual results. The result was positive overall - although revenues of US$17b were in line with what the analysts predicted, Applied Materials surprised by delivering a statutory profit of US$3.92 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Applied Materials
Taking into account the latest results, the current consensus from Applied Materials' 21 analysts is for revenues of US$19.3b in 2021, which would reflect a decent 12% increase on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 21% to US$4.78. Before this earnings report, the analysts had been forecasting revenues of US$18.5b and earnings per share (EPS) of US$4.51 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.6% to US$81.50per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Applied Materials at US$100.00 per share, while the most bearish prices it at US$62.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Applied Materials shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 12%, in line with its 10% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.4% next year. So although Applied Materials is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.