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Lam Research Corporation (LRCX), headquartered in Fremont, California, designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. Valued at $105.3 billion by market cap, the company’s products are used to deposit special films on a silicon wafer and etch away portions of various films to create a circuit design.
Shares of this global supplier of innovative wafer fabrication equipment and services have underperformed the broader market considerably over the past year. LRCX has gained 16.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 24.3%. In 2024, LRCX’s stock rose 1.8%, compared to SPX’s 17.2% rise on a YTD basis.
Narrowing the focus, LRCX has also lagged behind the Invesco Semiconductors ETF (PSI). The exchange-traded fund has gained about 24.1% over the past year. Moreover, the ETF’s 15.1% gains on a YTD basis outshine the stock’s low single-digit returns over the same time frame.
LRCX’s overall performance can be attributed to market volatility, high inflation, and geopolitical tensions. However, there is hope for improvement as memory spending is expected to increase. Challenges like the Federal Reserve's interest rate policies and the U.S.-China trade war have contributed to the company's recent downturn. Restrictions on high-tech exports to China have also been a major negative for chip providers. Additionally, sluggish global spending on mature nodes has contributed to LRCX’s performance.
On Jul. 31, LRCX reported Q4 results, and its shares closed down more than 9% in the following trading session. Its adjusted EPS of $8.14 exceeded Wall Street expectations of $7.52. The company’s revenue was $3.9 billion, topping Wall Street forecasts of $3.8 billion. For the year, the company’s EPS declined 12.7% year over year to $29. Its revenue stood at $14.9 billion, down 14.5% year over year. For Q1 2025, LRCX expects revenue of $4.1 billion (+/- $300 million), and its adjusted EPS is projected to be $8 (+/- $0.75).
For the current fiscal year, ending in June 2025, analysts expect LRCX’s EPS to grow 17.6% to $35.20 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 27 analysts covering LRCX stock, the consensus is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, two “Moderate Buys,” and nine “Holds.”
On Aug. 26, Morgan Stanley (MS) analyst Joseph Moore maintained a “Hold” rating on LRCX with a price target of $929, implying a potential upside of 16.5% from current levels.
The mean price target of $1051.44 represents a 31.9% premium to LRCX’s current price levels. The Street-high price target of $1325 suggests an ambitious upside potential of 66.2%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
