We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shares of several major semiconductor industry stocks were down in early morning trading Wednesday after the latest quarterly earnings reports from equipment suppliers ASML Holding (ASML - Free Report) and Lam Research (LRCX - Free Report) caused hesitation.
Nevertheless, there were plenty of positives to take away from both of these reports. Lam Research surpassed estimates on the top and bottom lines, reporting total revenue growth of 34.2% on 19% higher shipments.
Dutch equipment maker ASML also posted earnings and revenue beats. The firm also notched net sales growth of 35.7% and adjusted earnings growth of 12.3%. However, ASML said it expects gross profit margin to slip to about 43% in the second quarter from 48.7% in the first quarter.
Lam Research investors might also be concerned about slumping margins. The company said non-GAAP gross margin for the March quarter was down about 80 basis points from the previous quarter to 46.8%, and it expects that figure to fall in the range of 46.5% to 48.5% for the current quarter.
Lam also mentioned that it expects shipments to be between $2.85 billion and $3.15 billion in the quarter, which is slightly sluggish compared to the $3.13 billion in shipments witnessed during the March period.
Overall, Lam Research guided for adjusted earnings in the range of $4.80 to $5.20 per share and revenue of $2.95 to $3.25 billion—both of which exceeded our previous consensus estimates.
Still, both LRCX and ASML were met with volatility on Wednesday morning. Lam Research opened lower and quickly dipped to an intraday low of $196.50 per share, down about 7.5% from Tuesday’s close. ASML shares slumped as much as $9.70, or 4.6%, in early trading hours.
Analysts were quick to declare Lam Research’s post-earnings selloff a buying opportunity, with teams from Evercore ISI, Stifel, and B. Riley FBR all maintaining bullish stances.
“At or near $200, we are buyers all day long,” Evercore said in a note. “Put simply, the cost of adding each new memory bit is rising significantly across both DRAM and NAND, which should sustain elevated WFE for years to come.”
Stifel elaborated further, saying Lam Research’s shipments outlook “could embolden bears who believe we are at the 'peak' of the cycle and in particular, on the memory front, where there are concerns on oversupply and overcapacity,” but reiterated its buy rating for the stock.
But mixed reactions to the reports were enough to inspire selling throughout the semiconductor space early Wednesday morning. Shares of Micron (MU - Free Report) opened lower before surging back to Tuesday’s close, Texas Instruments (TXN - Free Report) was down as much as 1%, and Applied Materials (AMAT - Free Report) dipped nearly 5%.
Overall, the iShares PHLX Semiconductor ETF (SOXX - Free Report) slumped $25.77, or 1.9%, to a mid-morning low of $1331.95 per share. However, the fund bounced of this daily low around 10:30 am EST.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Can Hackers Put Money INTO Your Portfolio?
Earlier this year, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Why Did Semiconductor Stocks Dip This Morning?
Shares of several major semiconductor industry stocks were down in early morning trading Wednesday after the latest quarterly earnings reports from equipment suppliers ASML Holding (ASML - Free Report) and Lam Research (LRCX - Free Report) caused hesitation.
Nevertheless, there were plenty of positives to take away from both of these reports. Lam Research surpassed estimates on the top and bottom lines, reporting total revenue growth of 34.2% on 19% higher shipments.
Dutch equipment maker ASML also posted earnings and revenue beats. The firm also notched net sales growth of 35.7% and adjusted earnings growth of 12.3%. However, ASML said it expects gross profit margin to slip to about 43% in the second quarter from 48.7% in the first quarter.
Lam Research investors might also be concerned about slumping margins. The company said non-GAAP gross margin for the March quarter was down about 80 basis points from the previous quarter to 46.8%, and it expects that figure to fall in the range of 46.5% to 48.5% for the current quarter.
Lam also mentioned that it expects shipments to be between $2.85 billion and $3.15 billion in the quarter, which is slightly sluggish compared to the $3.13 billion in shipments witnessed during the March period.
Overall, Lam Research guided for adjusted earnings in the range of $4.80 to $5.20 per share and revenue of $2.95 to $3.25 billion—both of which exceeded our previous consensus estimates.
Still, both LRCX and ASML were met with volatility on Wednesday morning. Lam Research opened lower and quickly dipped to an intraday low of $196.50 per share, down about 7.5% from Tuesday’s close. ASML shares slumped as much as $9.70, or 4.6%, in early trading hours.
Analysts were quick to declare Lam Research’s post-earnings selloff a buying opportunity, with teams from Evercore ISI, Stifel, and B. Riley FBR all maintaining bullish stances.
“At or near $200, we are buyers all day long,” Evercore said in a note. “Put simply, the cost of adding each new memory bit is rising significantly across both DRAM and NAND, which should sustain elevated WFE for years to come.”
Stifel elaborated further, saying Lam Research’s shipments outlook “could embolden bears who believe we are at the 'peak' of the cycle and in particular, on the memory front, where there are concerns on oversupply and overcapacity,” but reiterated its buy rating for the stock.
But mixed reactions to the reports were enough to inspire selling throughout the semiconductor space early Wednesday morning. Shares of Micron (MU - Free Report) opened lower before surging back to Tuesday’s close, Texas Instruments (TXN - Free Report) was down as much as 1%, and Applied Materials (AMAT - Free Report) dipped nearly 5%.
Overall, the iShares PHLX Semiconductor ETF (SOXX - Free Report) slumped $25.77, or 1.9%, to a mid-morning low of $1331.95 per share. However, the fund bounced of this daily low around 10:30 am EST.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Can Hackers Put Money INTO Your Portfolio?
Earlier this year, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>