Applied Materials, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

It's been a good week for Applied Materials, Inc. (NASDAQ:AMAT) shareholders, because the company has just released its latest second-quarter results, and the shares gained 6.4% to US$166. Revenues were US$7.1b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.63 were also better than expected, beating analyst predictions by 17%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from Applied Materials' 32 analysts is for revenues of US$28.8b in 2025. This would reflect a satisfactory 2.5% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 4.3% to US$8.68. Before this earnings report, the analysts had been forecasting revenues of US$28.8b and earnings per share (EPS) of US$8.21 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Applied Materials

The consensus price target was unchanged at US$198, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Applied Materials at US$245 per share, while the most bearish prices it at US$152. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Applied Materials shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Applied Materials' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.2% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that Applied Materials is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Applied Materials' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Applied Materials' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Applied Materials analysts - going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Applied Materials' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.