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Lam Research Stock Up 2.4% on Rating Upgrade by Goldman
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Lam Research Corporation’s (LRCX - Free Report) price target was recently increased by approximately 8% to $125 from $116 by investment firm Goldman Sachs. In addition, analysts upgraded the rating on the stock to Buy.
Following the news, Lam’s share price increased more than 2%, reaching a high of $108.60 and eventually closing at $106.99.
Also, over the last six months, shares of Lam Research generated a return of 23.38% compared with the Zacks Semi Equipment- Wafer Fabrication industry’s gain of 19.77%.
Why the Hike?
Yoshiya Hari, an analyst at Goldman remains optimistic about Lam’s increasing market dominance and growth prospects in the 3D NAND market. Also, the analyst believes that Lam will see increasing market share in the logic market going forward, driven by increasing demand for IoT, auto, wearables and low-end phones among others.
The strength is driven by cloud computing, big data, mobile devices and IoT. These phenomena greatly increased the volume of data on information networks that can be stored, processed and analysed to increase efficiency or drive additional sales depending on circumstances and business models of companies.
Since storage is the starting point of this digital economy, there is huge demand for memory chips, particularly the more efficient variety. This has led to innovation in the form of 3D NAND. Lam’s products address the high aspect ratio challenges of advanced memory applications and position it well to capitalize on the growth opportunity that is likely to unfold over the coming years.
Yoshiya Hari said, "Lam has strong and growing market share in deposition and etch - two of the fastest growing segments in wafer fab equipment". He also said that Lam's increasingly diversified end-demand outlook, given that it has less exposure to PCs and more exposure to cloud should lead to less downside volatility over the next two-to-three years.
Last Quarter Update& Upcoming Guidance
In the fiscal first quarter, Lam Research delivered decent results with earnings outperforming our estimates. Lam’s revenues were $1.63 billion, up 5.6% sequentially and 2.0% year over year. Also, total system shipments were $1.71 billion during the reported quarter, up 7.4% from $1.59 billion reported last quarter.
Also, management provided a decent guidance for the fiscal second quarter. The company expects revenues of approximately $1.84 billion (+/- $75 million). Shipments are projected to be roughly $1.85 billion (+/- $75 million).
Conclusion
Lam Research is a leading global provider of innovative wafer fabrication equipment and services to the semiconductor industry.
The company is strongly positioned to benefit from technology inflections in the memory market where it is a dominant player. Leading edge technology spending in the logic and foundry segments is also expected to accelerate in the back half of the calendar year.
Additionally, Lam Research recently increased its quarterly dividend by about 50% to 45 cents a share from the prior payout of 30 cents, which is a good way of building investor confidence as these return shareholder value. The increase in dividend indicates that the company is heading toward strong growth.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the trailing four quarters.
TiVo Corporation delivered a positive earnings surprise of 97.76%, on average, in the trailing four quarters.
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Lam Research Stock Up 2.4% on Rating Upgrade by Goldman
Lam Research Corporation’s (LRCX - Free Report) price target was recently increased by approximately 8% to $125 from $116 by investment firm Goldman Sachs. In addition, analysts upgraded the rating on the stock to Buy.
Following the news, Lam’s share price increased more than 2%, reaching a high of $108.60 and eventually closing at $106.99.
Also, over the last six months, shares of Lam Research generated a return of 23.38% compared with the Zacks Semi Equipment- Wafer Fabrication industry’s gain of 19.77%.
Why the Hike?
Yoshiya Hari, an analyst at Goldman remains optimistic about Lam’s increasing market dominance and growth prospects in the 3D NAND market. Also, the analyst believes that Lam will see increasing market share in the logic market going forward, driven by increasing demand for IoT, auto, wearables and low-end phones among others.
The strength is driven by cloud computing, big data, mobile devices and IoT. These phenomena greatly increased the volume of data on information networks that can be stored, processed and analysed to increase efficiency or drive additional sales depending on circumstances and business models of companies.
Since storage is the starting point of this digital economy, there is huge demand for memory chips, particularly the more efficient variety. This has led to innovation in the form of 3D NAND. Lam’s products address the high aspect ratio challenges of advanced memory applications and position it well to capitalize on the growth opportunity that is likely to unfold over the coming years.
Yoshiya Hari said, "Lam has strong and growing market share in deposition and etch - two of the fastest growing segments in wafer fab equipment". He also said that Lam's increasingly diversified end-demand outlook, given that it has less exposure to PCs and more exposure to cloud should lead to less downside volatility over the next two-to-three years.
Last Quarter Update& Upcoming Guidance
In the fiscal first quarter, Lam Research delivered decent results with earnings outperforming our estimates. Lam’s revenues were $1.63 billion, up 5.6% sequentially and 2.0% year over year. Also, total system shipments were $1.71 billion during the reported quarter, up 7.4% from $1.59 billion reported last quarter.
Also, management provided a decent guidance for the fiscal second quarter. The company expects revenues of approximately $1.84 billion (+/- $75 million). Shipments are projected to be roughly $1.85 billion (+/- $75 million).
Conclusion
Lam Research is a leading global provider of innovative wafer fabrication equipment and services to the semiconductor industry.
The company is strongly positioned to benefit from technology inflections in the memory market where it is a dominant player. Leading edge technology spending in the logic and foundry segments is also expected to accelerate in the back half of the calendar year.
Additionally, Lam Research recently increased its quarterly dividend by about 50% to 45 cents a share from the prior payout of 30 cents, which is a good way of building investor confidence as these return shareholder value. The increase in dividend indicates that the company is heading toward strong growth.
LAM RESEARCH Price and Consensus
LAM RESEARCH Price and Consensus | LAM RESEARCH Quote
Some Well-placed Stocks in the Same Space
Currently, Lam Research has a Zacks Rank #2 (Buy). Some better-ranked stocks in the industry are Cognex Corporation (CGNX - Free Report) , TiVo Corporation and Itron, Inc. (ITRI - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the trailing four quarters.
TiVo Corporation delivered a positive earnings surprise of 97.76%, on average, in the trailing four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>