Trade of the Day: AMAT Stock Getting Lots of Love

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Applied Materials, Inc. (NASDAQ:AMAT) — Shares of AMAT stock broke out last week following the release of the company’s fiscal Q3 earnings.

Applied Materials, which is the largest manufacturer of wafer chips for the semiconductor industry, reported pro-forma earnings of 50 cents per share, beating the Zacks consensus estimate by 3 cents. While sales missed expectations, revenue was up more than 13% year over year to $2.82 billion, thanks to strong demand in Southeast Asia, Korea, Japan and China.

Zacks analysts also noted the recent positive analyst activity, saying the company is seeing numerous bullish revisions to earnings estimates. Specifically, they noted that there have been seven upward revisions in the past month and no downward revisions. For the upcoming quarter, EPS estimates have increased more than 35% in the past 30 days from 48 cents a share to 65 cents currently.

This week, analysts at Argus reaffirmed their “Buy” rating on AMAT stock and raised their price target by $5 to $34, which is 15% above the current price.

Turning to the chart, we can see that AMAT stock broke from an ascending bull channel last week following the earnings report.

Looking further back, after a decline from a high above $25 in February 2015 to a low under $15 in September, AMAT stock turned higher, due in part to a shakeup in management at the beginning of 2016. A breakaway gap in February triggered the change in direction and the beginning of a bull channel from about $20.

Last week’s earnings report resulted in a second continuation gap in the bull channel as analysts piled on with higher price projections. But continuation gaps have a habit of partially closing, so traders should attempt to buy AMAT stock under $29 with target of $35 for a potential gain of more than 20%.

AMAT Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/applied-materials-inc-amat-stock-trade-day/.

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