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Lam Research (LRCX): Can The Stock Price Run Sustain?

2:18 pm ET, 22 Mar 2018

LRCX is down 3% today, but it witnessed a 19% stock price hike in the past 12 weeks. The wafer fabrication company has succeeded in keeping up the interest of its shareholders since the past year.

Why are investors bullish about LRCX?

The products manufactured by LRCX are viewed as the essentials for the semiconductor industry. 

Semiconductor equipment companies should show double-digit growth year-on-year.

Companies with exposure to memory chip production should benefit from continued growth in memory demand.

In the coming 5 years, LRCX has devised a plan to return 50% of free cash flow to stockholders and raise its quarterly dividend to $1.10 per share (a 120% increase from June 2018).

Besides this, a $2 billion share repurchase program will start in the next 12-18 months.

What do the bears say?

While the semiconductor equipment industry is forecast to grow double-digit in 2018, growth will only be a quarter of the growth exhibited in 2017.

According to Finstead Research, LRCX’s average price target is $246.  There is a 10% upside (go to Finstead.com and type “LRCX upside” to get the latest figures).

The valuation of LRCX is lowest among its peers.

LRCX has a high Short Share of Float compared to the average for the industry, which is an indication of high volatility in the upcoming period.

Lam Research Corporation (LRCX) Stock Guide

Updated at: 6:24 pm ET, 12 Nov 2020

Before we start: if you're looking for LRCX stock price, you can quickly find it out by visiting Finny and typing "LRCX quote". If you're looking for a quick scoop on LRCX stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "LRCX". You'll get all this info in one place. Or you can just type "LRCX news" to get the latest stock news.

Looking to buy or sell Lam Research Corporation (LRCX)? Interested in getting the full scoop on LRCX, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this LRCX stock guide, we'll address key questions about LRCX, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are LRCX earnings?
2. When is LRCX earnings date?
3. What is LRCX dividend?
4. What is LRCX dividend yield?
5. What is LRCX stock forecast (i.e., prediction)?
6. LRCX buy or sell? What is LRCX Finny Score?
7. What are the reasons to buy LRCX? Why should I buy LRCX stock?
8. What are the reasons to sell LRCX? Why should I sell LRCX stock?
9. What are LRCX key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are LRCX earnings?

LRCX trailing 12-month earnings per share (EPS) is $17.60.

2. When is LRCX earnings date?

LRCX earnings date is January 27, 2021.

3. What is LRCX dividend?

LRCX forward dividend is $5.20.

4. What is LRCX dividend yield?

LRCX forward dividend yield is 1.52%.

Analyst Predictions

5. What is LRCX stock forecast (i.e., prediction)?

Based on LRCX analyst price targets, LRCX stock forecast is $404.91 (for a year from now). That means the average analyst price target for LRCX stock is $404.91. The prediction is based on 19 analyst estimates.

The low price target for LRCX is $232.00, while the high price target is $465.00.

LRCX analyst rating is Buy.

Analysis

6. LRCX buy or sell? What is LRCX Finny Score?

#{finnyScore:71}Our quantitative analysis shows 5 reasons to buy and 2 reasons to sell LRCX, resulting in Finny Score of 71.

7. What are the reasons to buy LRCX? Why should I buy LRCX stock?

Here are the reasons to buy LRCX stock:

  • Lam is a leader in the etch and deposition markets and counts major chipmakers, such as Samsung Electronics and Taiwan Semiconductor Manufacturing, as customers.
  • Lam has achieved superior share gains in recent years due to its strong equipment offerings in etch and deposition, combined with the 3D NAND and multiple patterning inflections that require more of those particular tools.
  • Demand is strong for advanced etch and deposition tools, because they help chipmakers continue down the path prescribed by Moore's law.
  • Traditionally, Lam Research has high exposure to the memory segment, which is likely to see tremendous growth over the next few years. The strength is driven by cloud computing, big data, mobile devices and IoT. These phenomena have greatly increased the volume of data on information networks that can be stored, processed and analysed to increase efficiency or drive additional sales depending on the circumstances and the business model of companies.
  • Technological advancements in the areas of multi-patterning, 3D device architecture and advanced packaging technologies are playing to Lam’s strengths. Technology transitions help to increase the efficiency of semiconductor manufacturing processes. Since new manufacturing techniques necessitate spending on new equipment, these changes usually lead to increased investment in manufacturing equipment.
  • Lam Research has a strong balance sheet, with cash and short term investments of approximately $5.7 billion at the end of fiscal second quarter, up from $6.2 billion in the prior quarter. Additionally, management returned $73.0 million through dividend. The company regularly repurchases shares to ensure a steady share count after dilution from stock option vesting.
  • LRCX quarterly revenue growth was 46.70%, higher than the industry and sector average revenue growth (0.08% and 0.53%, respectively). See LRCX revenue growth chart.
  • LRCX profitability is improving. The YoY profit margin change was 5.66 percentage points. See LRCX profitability chart.
  • LRCX forward dividend yield is 1.52%, higher than the industry (0.55%) and sector (0.23%) forward dividend yields. See LRCX forward dividend chart.
  • LRCX average analyst rating is Buy. See LRCX analyst rating chart.
  • LRCX cash to debt ratio is 1.14, higher than the average industry (0.26) and sector (0.17) cash to debt ratio. See LRCX cash to debt chart.

8. What are the reasons to sell LRCX? Why should I sell LRCX stock?

Let's look at the reasons to sell LRCX stock (i.e., the bear case):

  • Lam faces major competition from Applied Materials and Tokyo Electron, and would lose market share should it lose its technological edge to either firm.
  • The firm operates in the cyclical semiconductor equipment industry.
  • The recent wave of consolidation in wafer fabrication equipment customers could have a negative impact on companies such as Lam that sell a wide array of tools.
  • The semiconductor equipment industry has historically been very cyclical. It fluctuates highly with respect to timing and length of the cycles. During the down cycle, there could be decreased demand from consumers.
  • The semiconductor capital equipment industry experiences rapid changes and is highly competitive globally. To compete effectively, considerable financial resources are required to strengthen and augment product and services portfolio as well as maintain customer service and support locations worldwide. Semiconductor manufacturers assess capital equipment suppliers, and the ability to do well in the marketplace depends upon how well the existing products are maintained and enhanced while new ones are launched to meet customer requirements on a timely basis.
  • Lam Research derives a major portion of its revenues from outside the U.S. This is natural because a lot of the semiconductor facilities using its manufacturing equipment are located in Asian countries. In fact, in fiscal 2016, revenues from the United States accounted for only 8.4% of its revenues, while Korea and Taiwan contributed 18% and 25%, respectively.
  • LRCX stock price ($418.46) is close to the 52-week high ($424.79). Perhaps now is a good time to sell? See LRCX price chart.
  • LRCX average analyst price target ($404.91) is below its current price ($418.46). See LRCX price target chart.

Key Stats

9. What are LRCX key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for LRCX:

Metrics LRCX
Price $467.40
Average Price Target / Upside $404.91 / -13.37%
Average Analyst Rating Buy
Forward Dividend Yield 1.22%
Industry Semiconductor Equipment & Materials
Sector Technology
Number of Employees 10,900
Market Cap $61.39B
Forward P/E Ratio 17.03
Price/Book Ratio 5.55
Revenue (TTM) $11.06B
YoY Quarterly Revenue Growth 46.70%
Profit Margin 23.60%

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