Applied Materials Stock Brushes Off Bull Notes After Earnings

The stock yesterday touched a more than 12-month high

Deputy Editor
May 19, 2023 at 10:31 AM
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Applied Materials, Inc. (NASDAQ:AMAT) is brushing off an upbeat quarterly report and subsequent bull notes. Shares were last seen down 2.9% to trade at $126.17, even after the semiconductor concern reported fiscal second-quarter earnings and revenue that bested Wall Street's estimates. The chip stock also issued better-than-expected guidance for its fiscal third quarter.

In response, no less than 13 analysts upped their price targets, including Citigroup who hiked to $160 from $136. Coming into today, the 12-month average target price of $132.27 is a 5.7% premium to last night's close, while 18 of 26 covering brokerages rated AMAT a "buy" or better.

Options traders are chiming in as well, with 23,000 calls and 9,500 puts across the tape so far, which is six times the volume that is typically seen at this point. Most popular is the May 130 call, followed by the 131 call in the same series, with positions being sold-to-open at both. 

The preference for bullish bets is the norm in the options pits, per the equity's 50-day put/call ratio of 1.22 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 76% of reading from the past 12 months. 

Options are affordably priced right now, too, according to AMAT's Schaeffer's Volatility Index (SVI) of 35% that stands higher than just 2% of reading from the past year. This implies options traders are pricing in low volatility expectations at the moment. 

After winning six of the last seven session, shares yesterday touched a more than 12-month high of $132.06. Applied Materials stock is now pacing for its best weekly performance since November, and stands 30% higher in 2023.


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