Applied Materials Inc. (NASDAQ: AMAT) is scheduled to report its fiscal third-quarter financial results after the markets close on Thursday. Consensus estimates from Thomson Reuters call for $0.33 in earnings per share (EPS) on $2.54 billion in revenue. In the same period of the previous year, it posted EPS of $0.28 and revenue of $2.26 billion.

Despite reporting solid first-quarter earnings that were above consensus and giving guidance that was in line with expectations, the stock has continued to underperform throughout the quarter. So far 2015 has not been a good year for Applied Materials; shares are down nearly 30% year to date, but down only 16% within the past 52-weeks.

Most analysts are cautiously optimistic about Applied Materials. Merrill Lynch recently pointed to the analysts day at Semicon West and commentary from peers on the robust chip cycle as upcoming very positive catalysts. The firm also sees the stock as a big restructuring story, at a very cheap bargain basement prices.

Merrill Lynch analysts are very positive on the stock and see it benefiting not only from the semiconductor side of the business, but also the larger, higher resolution and flexible screens on the display side of the business. Many on Wall Street were disappointed when the merger with Tokyo Electron was called off earlier this year, and the Merrill Lynch team points out the stock has been out of favor ever since.

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This semiconductor capital equipment leader has lagged the overall tech market over the past year. Applied Materials is actually now trading below all the moving averages, and for patient investors may be a high-quality pick. Applied Materials is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Its technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.

A few analysts weighed in on the company ahead of earnings:

• Pacific Crest reiterated an Overweight rating with a price target of $27.
• Summit Research downgraded it to a Hold rating from a Buy with an $18 price target.
• B. Riley reiterated a Neutral rating with a $22 price target.

The company saw its short interest for the end of July settlement date decrease to 19.54 million shares. The previous reading was 20.01 million. The current reading is the third lowest level of the year. The highest reading year to date was 82.90 million in late February.

Shares of Applied Materials were down 1.9% at $17.01 on Wednesday. The stock has a consensus analyst price target of $23.67 and a 52-week trading range of $16.77 to $25.71.

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