AMAT
Applied Materials, Inc.
$530.13
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 59.5% above fair value
You pay
$530.13
Bear
$217.54
Fair
$332.38
Bull
$458.83
Bear
$217.54
-59.0%
9% stage 1 growth, 12% discount
Fair
$332.38
-37.3%
15% stage 1 growth, 12% discount
Bull
$458.83
-13.4%
19% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (15% base case)
Terminal Value % of EV
38%
Implied Market Multiple
80.5x
Market is pricing in (growth)
29.8%
vs 14.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $621.42 from 53 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $332.38 per share.
Warnings
Wall Street's average price target is $621.42 (from 53 analysts). Our estimate is 72% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions