Goldman Sachs Suggests Buying Put Spreads on Applied Materials

Goldman Sachs is out with a research note this morning, where it suggests that traders buy put spreads on Applied Materials AMAT ahead of earnings. Given the over-shipment that occurred in Semis in 1H2011 and the growing risks to growth, Goldman's analyst expects AMAT's customers to continue to lower capex spending. The analyst expects TXN's mid-quarter update to confirm that semi shipments in 2H2011 are likely to be weak. While TXN is not a meaningful customer for AMAT, its diversified exposure will likely provide broad read-through to key semi end markets. AMAT shares tend to move 2x their average daily move on semiconductor mid-quarter updates. The analysts suggest buying the September $12/10 put spread for $0.64. Applied Materials, Inc. provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic and related industries.