First Albany downgrades Applied Materials (AMAT) to neutral from buy.
Analyst Auguste Richard says earnings per share were in-line with his forecast, but earnings quality was weak. He says Applied Materials missed its revenue guidance, his estimate by $150 million, and days sales outstanding increased 7 days to 69 days. He says the company's bookings were up 7%, vs. its estimate of up 5%. However, subtracting out cancellations, bookings would have only been in line with guidance.
Richard thinks the company will trade sideways until bookings momentum returns. He cuts his 32 cents first-quarter earnings-per-share estimate on $2.50 billion in revenue to 15 cents on $1.75 billion in revenue, and $1.09 fiscal 2005 (Oct.) earnings-per-share on $9.2 billion in revenue to 59 cents on $6.65 billion in revenue. He thinks the shares are fairly valued at 3 times the book value, or $16.