AMAT
Applied Materials, Inc.
$432.16
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 46.6% above fair value
You pay
$432.16
Bear
$192.88
Fair
$294.70
Bull
$406.82
Bear
$192.88
-55.4%
9% stage 1 growth, 12% discount
Fair
$294.70
-31.8%
15% stage 1 growth, 12% discount
Bull
$406.82
-5.9%
19% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (15% base case)
Terminal Value % of EV
38%
Implied Market Multiple
65.6x
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 $513.76 from 53 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $294.70 per share.
Warnings
Wall Street's average price target is $513.76 (from 53 analysts). Our estimate is 66% 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