Applied Materials "Optimistic About 2020," Triggers Analyst Bull Notes

Call traders have also preferred the equity during the past 10 weeks

Managing Editor
Nov 15, 2019 at 9:54 AM
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Chip name Applied Materials, Inc. (NASDAQ:AMAT) is up 8% to trade at $61.53 -- and nabbed a fresh annual high of $61.90 this morning -- the equity swimming in bull notes after the company's fiscal fourth-quarter results last night. Applied Materials shared a quarterly beat and forecast its fiscal first-quarter revenue at $4.1 billion, above analyst estimates. The firm touted a rise in China sales, while sharing expectations for post-5G rollout equipment upgrades next quarter, with CEO Gary Dickerson adding that the company is "optimistic about 2020."

Analysts have flocked to the chip stock tenfold, with no fewer than 12 price-target hikes and one on the books so far. Instinet upgraded AMAT to "buy" from "neutral" and hiked its price target to $68 from $40, while J.P. Morgan Securities established a December 2020 price target of $72, saying the company will benefit from higher semiconductor revenue this quarter. From a broader perspective, 11 of 18 firms sport a "buy" or "strong buy" rating coming into today, with not a single "sell" in sight.

Meanwhile, data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a preference for AMAT calls in recent weeks. This is per the stock's 50-day call/put volume ratio of 1.53, which ranks in the elevated 71st percentile of its annual range.

AMAT has now tacked on 86% in 2019, continuing its steady climb higher on the charts. A double layer of support has come from both the 50- and 70-day moving averages within the last few months. Plus, with today's bull gap taking no prisoners, the shares are already trading at an annual high out of the gate while simultaneously testing March 2018 record high territory.


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