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Lam Research earnings as expected in a 'historically bad' memory market states analyst

Published 27/01/2023, 06:12 am
© Reuters.

Lam Research (NASDAQ:LRCX) gained Thursday after it topped profit and revenue expectations, resulting in a somewhat neutral response from analysts.

LRCX posted earnings of $10.71 per share, $0.66 better than the analyst estimate of $10.05. Revenue for the quarter came in at $5.28 billion versus the consensus estimate of $5.11 billion.

Morgan Stanley (NYSE:MS) analyst Joseph Moore told investors in a note that the results were "largely as expected in a tough memory market."

Moore maintained an Overweight rating on the stock, raising the price target to $550 from $404. "While the deferred revenue impact is less than we expected, the general shape of the business is similar to our expectations," said Moore. "Guidance of $3.8 bn was well below consensus ($4.38 bn), and slightly below our estimate ($3.93 bn)."

The analyst added that it's not going to get easier any time soon, but they believe memory shipments will be at trough levels by June due to a "historically bad memory market vs. foundry/logic where headwinds seem likely to intensify through the year and into 1h24."

Jefferies analyst Mark Lipacis maintained a Buy rating on Lam Research, upping the firm's price target on the stock to $565 per share from $525, adding that it remains a top pick.

"Often the best time to make money owning semi stocks is when 2nd derivatives inflect — said another way, when things go from 'really bad' to 'bad.' This is where we believe LRCX is now," said Lipacis.

The firm believes LRCX's CY23 Street Rev/EPS estimates will have been lowered for the 2nd earnings call in a row — this time by around 9%/4%, but that it would be lower than the 15%/24% decline post the September quarter earnings.

By Sam Boughedda

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