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Applied Materials gets neutral analyst reactions

Despite topping analyst estimates for its fourth quarter, Applied Materials (Nasdaq: AMAT) received lukewarm ratings from analysts.

Shares of the chip equipment giant rose 0.63 to 43.38.

In the fourth quarter, Applied Materials earned $664 million, or 77 cents a share, on sales of $2.92 billion, topping analyst earnings estimates by a penny. Sales were up 81 percent from the year-ago period, which saw the company earn $303 million, or 37 cents a share, on sales of $1.61 billion.

For the fiscal year, Applied Materials took in $2.05 billion, or $2.39 a share, on sales of $9.56 billion up from the $757 million, or 92 cents a share, earned on sales of $5.1 billion in fiscal 1999.

Analyst reaction was lukewarm.

Analyst M. Ali Irani at CIBC World Markets reiterated his "buy" rating.

Brett A. Hodess at Merrill Lynch reiterated near-term "accumulate," and kept a long-term rating of "buy." The target price was cut to $55 from $76 per share.

Wit SoundView analyst Michael O'Brien gave the company a "buy" rating, citing concerns over weakened demand. "As we look into the chip-end markets (computers, communication and consumers), we see demand... less robust than we would have anticipated and inventory building up," O'Brien wrote in a report. While maintaining year-over-year growth in revenues and earnings of 31 percent, the analyst noted that he believes that a "substantial amount" of risk exists.

He reiterated his conviction that the fundamentals of Applied Material's business were "deteriorating".

O'Brien set the share price target for the company at $42.75 and sees earnings for fiscal 2001 of $3.26.