Applied Materials Stock Slips on Downgrade, Sector Pressure

Surging bond yields are sending tech stocks lower

Assistant Editor
Sep 28, 2021 at 10:01 AM
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The shares of Applied Materials, Inc. (NASDAQ:AMAT) are down 3.4% to trade at $137.96 at last check, after a downgrade from New Street Research to "neutral" from "buy," citing the stock's high valuation and limited upside. Surging bond yields are also weighing on AMAT today, as chip stock's are pressured lower by the tech sector's slump. 

Since the stock's April 5 record high of $146.00, the $142-145 region has served as a ceiling. However, long-term support at the ascending 160-day moving average caught the equity's mid-August pullback to the $125 level. Year-to-date, Applied Materials stock is still up 60.5%. 

The majority of analysts are bullish on the security. Of the 16 in coverage, 13 carry a "buy" or better rating, with the three at a tepid "hold." Plus, the 12-month consensus price target of $162.70 is an 18% premium to current levels. 


In the options pits, 2.52 calls have been bought for every put in the last two weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The most active option during this time was the October 155 call. 

Plus, now looks like a good time to weigh in on Applied Materials stock's next move with options. AMAT is seeing attractively priced premiums at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 32%, which sits in the 16th percentile of its annual range. Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at 85 out of 100, meaning AMAT has tended to exceed option traders' volatility expectations during the past year.


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