A Flurry of Analyst Predictions Ahead of Applied Materials' Earnings Tomorrow

The Street has weighed in with a flurry of commentary on Applied Materials (AMAT) this morning ahead of the company’s announcement tomorrow of results for its fiscal second quarter ended April. The consensus view is for revenue of $2.14 billion and profits of 22 cents a share. The expectations are basically that the company will show weakness in its core semiconductor equipment sector, with strength in solar and flat-panel display segments.

Here’s a rundown on some of the Street comments from this morning:

• Satya Kumar, Credit Suisse: Kumar today trimmed his EPS estimate for the October 2008 fiscal year to 93 cents, from 95 cents. He sees April quarter orders down 2%, versus guidance of -5% to up 5%, with silicon orders down 5%, worse than guidance of flat to up slightly. He expects July guidance of orders down 5%-10%. Kumar says no pick up in semi equipment orders is likely before the 2009 second half. And Kumar is cautious on solar: he says the business “looks promising on paper,” but that he wants to “see a lot more done before building it up into the stock price.” He stays Neutral on the stock.
• Ben Pang, Caris & Co.: Pang says “fireworks” on the conference call tomorrow are unlikely, with semi weakness already priced in. He says the company is not likely to provide 2009 guidance. For the July quarter, he sees order guidance of flat to down 10%. Pang, who has a Buy on the stock based on growth in solar, expects the company to provide updates on factory startups in Spain and India.
• Mehdi Hosseini, FBR: He also thinks the call could be a non-event, since everyone already knows that the semi business is weak, and the display business is strong, with no real news on the solar front. But he remains a bull on the stock, with an Outperform rating: his thesis is that the silicon business will bottom in the July quarter, and says “accumulating AMAT is like buying an option on its efforts in thin-film solar.”
• Mahesh Sanganeria, RBC Capital: Sanganeria sees margin pressure in the quarter from increasing competition on the semiconductor side of the business. He sees orders down 3% in April and down 10%-15% in July. He maintains a Sector Perform rating on the stock.
• Raj Seth, Cowen: He says the stock is already discounting lower estimates. “Though AMAT might bound on ‘can’t get any worse psychology, we think it’s prudent to remain cautious as a second half fundamental pick up is anything but certain,” Seth writes. He says likes AMAT, but that there is “no rush” given the core weakness in the semiconductor equipment segment. Seth maintains a Neutral rating.