Applied Materials: Stock Gaining Ground Ahead Of Earnings Tuesday

Applied Materials (AMAT) shares were on the rise ahead of the company’s earnings report for the fiscal second quarter ended April, which is due after the close Tuesday. The Street consensus is for $2.35 billion in revenue and EPS of 28 cents for the April quarter, and $2.43 billion and 30 cents for the July quarter.

Monday morning, there were a flurry of research notes on the company, mostly of the bullish variety.

Timothy Arcuri of Citigroup expects the company to be slightly ahead of consensus; he sees orders of $2.75 billion, or at the high end of the company’s guidance of up 2%-7% sequentially. He also sees the company raising its outlook for solar-related orders from $200 million to $400 million to $500 million and expects the company to raise its 2010 solar model to “nearly” $2 billion from $500 million, “which could excite some longer-term investors.” UBS raised its rating on Applied last week, also asserting that solar could grow faster than people have been thinking. On the other hand, Arcuri thinks the company will guide July orders to flat sequentially. He raised his EPS estimates for the October 2007 fiscal year to $1.18 from $1.05; for ‘08 he goes to $1.21 from $1.11. His price target goes to $20 from $19.

Patrick Ho, of Stifel Nicolaus, also sees the company meeting or beating the Street in the April quarter. He sees bookings up 4% sequentially. Ho maintains a Buy rating on the stock and $25 price target.

Mahesh Sanganeria, of RBC Capital, sees April orders at the high end of guidance, but July orders down 5%. He also says that he expects management “to moderate its bullish tone compared to last quarter’s call.” Sanganeria maintains his Outperform rating, but says he would consider downgrading if management sets expectations too high.

Applied Monday was up 84 cents at $20.61.

AMAT 1-yr chart: