Lam Research Analyst Roundup

Analysts commented on Lam Research Corporation LRCX Monday after attending technology conferences.

Bank of America rated Lam Research a Buy and raised its price target from $80 to $92.

Analyst Krish Sankar thought “Lam is likely to outperform its peers this cycle due to its strong position in deposition and etch as well as the exposure to memory manufacturers. We expect shipments to start improving as the cycle strengthens next year.

“We estimate LRCX's peak earnings could be around $8.00 next cycle. As a cyclical stock we apply a trough multiple (11x) on our peak earnings estimate to also arrive at our $92 price objective.”

Sankar noyed that the “upside to our PO would be driven by stronger-than-expected electronics demand that would tighten up semiconductor capacity, driving increased semiconductor equipment sales and/or increasing market share. Downside risks involve slower than expected capital spending cycle, delay in memory capacity adds, market share loss in etch or clean segments, and macro headwinds.”

Deutsche Bank raised its price target on the company from $81 to $95 and maintained a Buy rating.

Analyst Sidney Ho felt RCX is well positioned to gain share in the wafer fab equipment (WFE) market, driven by a strong focus on technology inflection spending over the next few years.”

Ho expected “LRCX to continue to outgrow the WFE market in 2015/16. Combined with an increased emphasis on shareholder returns, we expect valuation multiples to improve. Trading at 14x ex-cash vs. a sector average of 17x, LRCX is attractively valued and is the cheapest among front-end equipment peers.”

“As a result of the share outperformance, the valuation discount of LRCX has narrowed from ~30 percent in mid-2013 to ~20 percent currently, yet it still remains the cheapest stock among front-end equipment suppliers,” according to the Deutsche Bank note.

Lam Research recently traded at $84.13, up 0.01 percent.