Earnings Previews: Applied Materials, Deere

Before markets opened Wednesday, Analog Devices, Lowe’s, Target and TJX reported results that beat analysts’ expectations.

After markets close today, we will hear from Bath & Body Works, Cisco, Nvidia and Robinhood as well. Then, before markets open on Thursday, department store operators Kohl’s and Macy’s will report July-quarter results.

Here is a preview of two more companies, one reporting after markets close Thursday and the other first thing Friday morning.

Applied Materials

Shares of semiconductor manufacturing equipment maker Applied Materials Inc. (NASDAQ: AMAT) have added about 95% to their price over the past 12 months, about half of that coming during 2021. The global shortage of semiconductors continues to drive demand for more chip-making equipment from Applied Materials and its competitors.

Analysts remain solidly bullish on the stock, with 23 of 29 rating the shares a Buy or Strong Buy. The recent price near $129.20 implies an upside potential of 23.8%, based on a median price target of $160. Using the high target of $195, the implied upside is about 51%.

For the company’s fiscal third quarter, analysts are expecting earnings per share (EPS) of $1.78, which would be up 9.2% sequentially and 68% year over year. Revenue is forecast to come in at $5.92 billion, up 6% sequentially and nearly 35% year over year. Full-year EPS are forecast at $6.63, up 59% year over year, on revenue of $22.72 billion, or about 32% higher.

The stock trades at 16.8 times expected 2021 EPS, 15.1 times estimated 2022 earnings and 14.6 times estimated 2023 earnings. The stock’s 52-week range is $54.15 to $146.00. Applied Materials pays an annual dividend of $0.96 (yield of 0.75%).

Deere

Shares of farming and heavy equipment maker Deere & Co. (NYSE: DE) have gained about 95% over the past 12 months, including a 40% increase so far in 2021. Much of Deere’s potential for the rest of this year is down to farm prices. Two of Cathie Wood’s ARK ETFs own 232,612 shares of Deere stock altogether, about 15,000 fewer than the company reported as of June 30.

Analysts are warming up to the stock, with 14 of 23 tagging Deere with a Buy or Strong Buy rating and seven more rating it a Hold. At a price of around $373.30, the upside potential based on a median price target of $421.50 is nearly 13%. At the high target of $464, the upside potential is 24.3%.

Consensus estimates call for third-quarter revenue of $10.33 billion, down 6% sequentially and up 31% year over year. EPS are forecast at $4.58, down 19.5% sequentially and up 78% year over year. For the full fiscal year, analysts are looking for EPS of $18.09, more than double last year’s level, on revenue of $39.8 billion, an increase of 27.3% compared with 2020.

Shares are trading at 19.8 times expected 2021 EPS, 16.9 times estimated 2022 earnings and 16.0 times estimated 2023 earnings. The stock’s 52-week range is $189.38 to $400.34. Deere pays an annual dividend of $3.60 (yield of 0.96%).

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