Analyst Note| Abhinav Davuluri, CFA |
Wide-moat Lam Research reported fiscal first-quarter results that came in ahead of our expectations. Sustained logic and foundry strength were bolstered by an improvement in NAND and DRAM revenue. Management anticipates growing equipment sales in memory entering 2021, as NAND customers pursue 96-layer 3D NAND and beyond and DRAM spending recovers following a stretch of limited capacity expansion. Based on Lam’s guidance for the December quarter ($3.3 billion in revenue at the midpoint) and positive outlook for calendar 2021, we think fiscal 2021 (ending in June 2021) sales will grow in the double-digits. We are raising our fair value estimate for Lam Research to $400 per share from $360 as we incorporate a stronger growth outlook.