Analyst Note| Abhinav Davuluri, CFA |
Wide-moat Lam Research reported fiscal third-quarter results that came in ahead of our expectations. Sustained memory sales were bolstered by record foundry revenue. We appreciate the fact that Lam has become more diversified in end-market exposure. Based on recent capital expenditures raises from TSMC and Intel and improved memory spending, we think the wafer fab equipment market will be up 20% in 2021. After incorporating Lam’s guidance for the June quarter ($4 billion in revenue at the midpoint) and positive outlook for calendar 2021, we now think fiscal 2021 sales will grow over 45%. We are raising our fair value estimate to $600 per share from $505 as a result, and we view shares as fairly valued.