Lam Research is the IBD Stock Of The Day as the semiconductor equipment maker looks to benefit from rising complexity in the chipmaking process. LRCX stock reached a buy point Monday.
On the stock market today, LRCX stock surged 4.8% to close at 552.27.
LRCX stock broke out of a flat base with a buy point of 548.95, according to IBD MarketSmith charts. Aggressive investors could have used today's move above the stock's April 20 high of 536.50 as another entry point, based on IBD analysis.
LRCX stock has risen since the company's fiscal third-quarter earnings report on April 19. The chip gear vendor topped Wall Street's targets for the March quarter but disappointed with its outlook for the current period amid weak demand for new semiconductor equipment.
Lam Research Posts Mixed Quarterly Report
Fremont, Calif.-based Lam Research earned an adjusted $6.99 a share on sales of $3.87 billion in the quarter ended March 26. Analysts polled by FactSet had expected earnings of $6.52 a share on sales of $3.82 billion. However, on a year-over-year basis, Lam earnings fell 6% as sales declined 5%.
For the current quarter ending June 25, Lam Research forecast adjusted earnings of $5 a share on sales of $3.1 billion. LRCX stock analysts had predicted earnings of $5.61 a share on sales of $3.46 billion for the fiscal fourth quarter. Lam's guidance would translate to year-over-year declines of 43% in earnings and 33% in sales.
A pullback in capital equipment spending, especially by memory-chip makers, has pressured Lam's results lately.
Lam executives say rising complexity in semiconductor production is fundamental to the company's long-term growth prospects. That includes the transition to extreme ultraviolet lithography systems and gate-all-around 3D chip designs. Lam also looks to gain from the tech industry's increasing investments in artificial intelligence.
LRCX Stock Is On Two IBD Lists
Mizuho Securities analyst Vijay Rakesh reiterated his buy rating on LRCX stock after the company's March-quarter earnings report. However, he lowered his price target to 520 from 525.
Lam Research is well-positioned for the eventual recovery in semiconductor equipment spending, Rakesh said in a note to clients. The roughly 50 new chip fabrication plants, or fabs, that are under construction worldwide should provide a tailwind for Lam, he said.
LRCX stock is on IBD's SwingTrader and Tech Leaders stock lists.
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