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Lam Research Corp LRCX

Morningstar Rating
$922.67 −8.06 (0.87%)
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Company Report

Lam Research Earnings: The Memory Recovery Is Underway, but Shares Are Well Out of Reach

We maintain our $660 fair value estimate for shares of wide-moat Lam Research after it reported results toward the high end of management guidance in the December quarter. Lam’s results continue to reflect an ongoing cyclical recovery in chip equipment spending, particularly for memory chipmakers to which Lam is more heavily exposed. After Lam saw a more than 20% sales decline in calendar 2023, we expect a double-digit growth year for the firm in calendar 2024. We like Lam’s exposure to steep recoveries in memory chip spending but continue to see shares as overvalued. We believe shares have skyrocketed over the past couple of quarters over exuberance for a memory chip recovery and have now far exceeded our expectations for Lam’s business fundamentals in the future. We would encourage investors to wait for a better entry point on the stock.

Price vs Fair Value

LRCX is trading at a 40% premium.
Price
$922.67
Fair Value
$353.00
Uncertainty
High
1-Star Price
$7,231.00
5-Star Price
$474.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Lam Research is the market share leader in etch, which is the largest segment of the WFE market, and the clear number two share holder in deposition.

Bears

Lam Research lacks the scale of Applied Materials, its largest competitor, and could face market share losses if it is not able to adequately invest.

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News

Trading Information

Previous Close Price
$930.73
Day Range
$912.85924.10
52-Week Range
$467.03955.99
Bid/Ask
$913.33 / $923.95
Market Cap
$120.96 Bil
Volume/Avg
615,103 / 981,957

Key Statistics

Price/Earnings (Normalized)
33.75
Price/Sales
8.62
Dividend Yield (Trailing)
0.81%
Dividend Yield (Forward)
0.87%
Total Yield
3.23%

Company Profile

Lam Research is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segments of deposition and etch, which entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. Lam holds the top market share in etch and holds the clear cut second share in deposition. It is more exposed to memory chipmakers for DRAM and NAND chips. It counts as top customers the largest chipmakers in the world, including TSMC, Samsung, Intel, and Micron.
Sector
Technology
Industry
Semiconductor Equipment & Materials
Stock Style Box
Large Core
Total Number of Employees
17,200

Competitors

Valuation

Metric
LRCX
AMAT
KLAC
Price/Earnings (Normalized)
33.7524.5429.53
Price/Book Value
14.739.4329.91
Price/Sales
8.626.289.56
Price/Cash Flow
30.8520.9827.78
Price/Earnings
LRCX
AMAT
KLAC

Financial Strength

Metric
LRCX
AMAT
KLAC
Quick Ratio
1.951.771.16
Current Ratio
3.062.711.91
Interest Coverage
20.9824.6011.26
Quick Ratio
LRCX
AMAT
KLAC

Profitability

Metric
LRCX
AMAT
KLAC
Return on Assets (Normalized)
19.81%22.91%22.38%
Return on Equity (Normalized)
45.47%44.88%109.87%
Return on Invested Capital (Normalized)
28.12%30.44%37.13%
Return on Assets
LRCX
AMAT
KLAC
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