For Immediate Release
Chicago, IL – February 16, 2012 – Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Applied Materials,
Inc. (AMAT), Lam Rearch (LRCX),
Novellus Systems, Inc. (NVLS), KLA-Tencor
Corporation (KLAC) and CA Technologies
(CA).
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Here are highlights from Wednesday’s Analyst
Blog:
Earnings Preview: Applied
Materials
Applied Materials, Inc. (AMAT) is scheduled to
announce its fiscal first-quarter 2012 results on February 16,
2012. We witness only one upward movement in analyst estimates in
the build-up to the release.
Prior-Quarter Synopsis
AMAT’s fourth quarter 2011 pro forma earnings were in line with
the Zacks Consensus Estimate as lower revenue and margins were
partially offset by strong opex management and a
lower-than-expected tax rate.
Revenue growth was weak across the Display and EES (solar)
segments, with the Silicon Systems Group (SSG) performing in line
with expectations. However, AMAT’s penetration in Asiadeepened
significantly, helping the Applied Global Services (AGS) segment
exceed expectations.
Orders in the quarter were down 33.0% sequentially due to order
declines in display (-91% sequentially) and EES (-3% sequentially).
The lower demand for TVs and mobile devices in the Display segment
and excess capacity in the EES segment were the main reasons for
the decline. Gross margins also declined sequentially to 39.6%
aslower volumes impacted cost absorption.
First Quarter Guidance
AMAT now projects first quarter revenue to decrease 5–15%
sequentially, with SSG (including Varian) increasing 5–20%
sequentially, AGS declining 10–20% (the combined effect of lower
200mm sales, lower utilization rates and the absence of thin film
revenue), and Display and EES also falling 40–60%.The non-GAAP EPS
is expected to come in at 8–16 cents a share. For the first
quarter, the Zacks Consensus Estimate is pegged at 12 cents.
(Detailed earnings results can be viewed in the blog titled:
Applied Offers Murky Outlook).
Agreement of Analysts
Out of the 17 analysts providing estimates for the first
quarter, none made any revisions in the last 30 days. For fiscal
2012, only 1 analyst made an upward revision over the same 30-day
time period.
A few analysts expect a decent first quarter with earnings and
revenue at the high end of the guidance but remain concerned about
gross margins due to the increased exposure to Samsung.
The analysts believe that Display and EES sales will fall, but
be in line with guidance, due to the ongoing solar and LCD panel
inventory glut. They believe that pressure in both Display and EES
will partially be offset by growth in Silicon, helping revenue to
come in modestly above the mid-point of guidance, consistent with
its peers including Lam Rearch (LRCX),
Novellus Systems, Inc. (NVLS) and
KLA-Tencor Corporation (KLAC).
Additionally, though analysts see upside potential for Silicon
orders, they do not anticipate an order recovery in Display or EES
segments in the to-be-reported quarter, indicating continued
sluggishness in these markets for some time.
However, a handful of analysts believe that the display business
will improve in the upcoming quarter, banking on investments in
LCD/OLED that they expect will enable recovery.
Magnitude of Estimate Revisions
In the past 30 days, there was no change to the Zacks Consensus
Estimate for the first quarter but it increased a penny to 80 cents
for fiscal 2012.
Over the 90-day period, the Zacks Consensus Estimate fell 6
cents to 12 cents for the first quarter and 22 cents for fiscal
2012.
The significant decline of 22 cents in the Zacks Consensus
Estimate for 2012 clearly indicates the uncertainties in the
semiconductor business and echoes the general pessimism for both
display and solar in 2012.
Our Recommendation
We do not expect a strong first quarter due to limited
visibility and lower overall semiconductor equipment spending
levels. Though we believe that there is potential in the solar
energy market over the long term, we remain cautious about the
company's efforts since management has already missed several
targets to bring its solar division to profitability.
We remain positive about Applied’s strong position in the
semiconductor market, the solar business in China, a vast portfolio
and strategic relationships, which will however be less effective
in the current market scenario.
Applied, which competes with other large equipment makers, such
as KLA-Tencor, Lam Research and Novellus Systems, holds a Zacks #3
Rank that translates into a short-term Hold rating.
CA Offers New Solutions
Computing major CA Technologies (CA) has
recently made some strategic moves, which reiterates the fact that
cloud computing and enterprise services are the two main areas of
development for the company. CA is leveraging its cloud computing
expertise and rolling out innovative solutions to grow its
business.
CA has recently integrated its new cloud offering CA AppLogic
turnkey platform with International Game Technology’s (IGT) IGT
Cloud for delivering advanced casino software and better gaming
experience to the end user.
IGT is trying to capitalize on the expertise of CA’s cloud
computing platform in order to enhance its operational efficiency,
and shift focus from infrastructure, maintenance and operations to
innovative product development.
The cloud computing segment of the company is slowly gaining
traction and the new orders in this segment include the Cal Credit
Card company, which deployed its "Safe Shopping" system deploying
CA Arcot TransFort for Issuers. This software provides 3-D secure
authentication and fraud prevention services for card processors
and issuers.
This cloud-based solution provides multiple layers of protection
and identity verification during a shopping transaction, where the
cardholder is not present physically. These solutions are
user-friendly and also time-saving and thus attract more companies
to implement them.
CA Inc.’s emerging opportunity in the virtualization/cloud
computing space is significant and could help accelerate growth
over the next 2-3 years. Cloud computing leads to increased service
and elevated security requirements for the companies that use them
and CA's product portfolio is well positioned to benefit from
it.
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APPLD MATLS INC (AMAT): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
KLA-TENCOR CORP (KLAC): Free Stock Analysis Report
LAM RESEARCH (LRCX): Free Stock Analysis Report
NOVELLUS SYS (NVLS): Free Stock Analysis Report
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