Applied’s recent share price jump came despite a reduction in its outlook for its fiscal fourth quarter to reflect the impact on earnings and revenue of new export restrictions on advanced technology. The company lowered expected EPS from a prior range of $1.82 to $2.18 to a new range of $1.54 to $1.78, but that appears to have had little impact on investors’ choice to buy the stock.
Of 30 analysts covering the stock, 22 have Buy or Strong Buy ratings and the other eight have Hold ratings. At a recent price of around $110.50 a share, the stock has outrun its median price target of $107.50. At the high target of $150.00, the upside potential is 35.7%.
For the company’s fourth quarter of fiscal 2022, analysts are expecting revenue of $6.44 billion, which would be down 1.3% sequentially but up 5.2% year over year. Adjusted EPS are forecast at $1.75, down 9.8% sequentially and by 10.0% year over year. For the full fiscal year that ended in October, analysts are currently forecasting EPS of $7.44, up 8.7%, on sales of $25.5 billion, up 10.6%.
The stock trades at 14.9 times expected 2022 EPS, 16.7 times estimated 2023 earnings of $6.61 and 16.1 times estimated 2024 earnings of $6.86 per share. The stock’s 52-week trading range is $71.12 to $167.06. Applied Materials pays an annual dividend of $1.04 (yield of 0.97%). Total shareholder return over the past year was negative 29.4%.
Gap
Apparel retailer Gap Inc. (NYSE: GPS) has seen its share price drop by more than 18% over the past 12 months. Since the beginning of the current quarter, however, shares have jumped more than 56%. About half the gain came after the company announced the sale of its stores in China and a $0.15 per share dividend for the fourth quarter ending in January.
The company announced Tuesday that it has opened a store on Amazon Fashion in hopes of reaching more customers. The company also may be hoping that an Amazon store will help with its persistent inventory issues.
Analysts remain cautious on the stock, with 14 of 21 having a Hold rating and just two others rating the shares at Buy. At a price of around $12.80 a share, the stock has outrun its median price target of $9.95. At the high target of $25.00, the implied gain is 95.3%.
Third-quarter fiscal 2023 revenue is forecast to come in at $3.83 billion, down 0.7% sequentially and 2.8% lower year over year. Analysts are forecasting a break-even quarter, compared to EPS of $0.09 in the prior quarter and EPS of $0.27 in the year-ago quarter. For the full 2023 fiscal year ending in January, analysts expect a loss per share of $0.27, down from EPS of $1.44 in the prior year, on sales of $15.67 billion, down 6%.
Gap stock trades at 17.8 times estimated 2024 EPS of $0.72 and 4.8 times estimated 2025 earnings of $0.90 per share. The stock’s 52-week range is $7.79 to $25.42. Gap pays an annual dividend of $0.60 (yield of 4.86%), and the total shareholder return for the past year was negative 46%.
Palo Alto Networks
Palo Alto Networks Inc. (NYSE: PANW) supplies cybersecurity platforms, including both hardware and software, along with subscription security and other professional services. Over the past 12 months, the share price has decreased by about 7.2%. The stock has been on a roller-coaster ride since May of 2021 and has bounced nearly 15% higher in the eight trading sessions.
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