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Lam Research (LRCX)
NASDAQ:LRCX
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Lam Research
(NASDAQ:LRCX)
82Outperform
Positive Factors
Financial Performance
Lam Research reported a strong beat-and-raise quarter and guided revenue for the March quarter above our Street-high estimates.
Market Leadership
Lam Research is seen as a key leader in etch and deposition markets with an expanding market share and SAM.
Shareholder Returns
Lam has in place authorization for $9B+ of buyback, implying ~8% EPS accretion.
Negative Factors
Export Controls
Management alluded to additional weakness in China WFE in C2H25 due to the $700MM impact of the recent U.S. export controls.
Revenue Growth Risks
The top-line growth targets are aspirational due to risks in the underlying WFE assumptions that may be extrapolating the peak China WFE in 2024.
Revenue Uncertainty
LRCX's likely C1H25-weighted revenue profile could invite more debate on whether WFE is peaking in about a quarter or two.
Lam Research (LRCX) vs. S&P 500 (SPY)
Market Cap
$80.09B
Dividend Yield1.4%
Average Volume (3M)13.77M
Price to Earnings (P/E)19.0
Beta (1Y)1.92
Revenue Growth13.21%
EPS Growth27.25%
CountryUS
Employees18,300
SectorTechnology
Sector Strength44
IndustrySemiconductors
Share Statistics
EPS (TTM)3.29
Shares Outstanding1,283,662,000
10 Day Avg. Volume19,056,695
30 Day Avg. Volume13,774,659
Financial Highlights & Ratios
PEG Ratio0.70
Price to Book (P/B)N/A
Price to Sales (P/S)6.01
Price to Cash Flow (P/CF)32.80
P/FCF Ratio32.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.90Price Target Upside48.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering24
Lam Research Business Overview & Revenue Model
Company DescriptionLam Research Corporation (LRCX) is a leading supplier of wafer fabrication equipment and services to the global semiconductor industry. The company operates in the technology sector, focusing on the design, manufacture, and servicing of equipment used in the production of integrated circuits. Lam Research’s core products include etch, deposition, strip, and clean equipment, which are critical for the fabrication of semiconductors used in a wide range of electronic devices.
How the Company Makes MoneyLam Research generates revenue primarily through the sale of semiconductor manufacturing equipment and related services. The company's key revenue streams include the sale of new equipment, spare parts, and comprehensive service agreements that offer maintenance and support for installed systems. Lam's financial performance is significantly influenced by its relationships with major semiconductor manufacturers, as well as its ability to innovate and provide cutting-edge solutions that meet the evolving demands of chipmakers. Additionally, strategic partnerships and collaborations with leading technology firms and research institutions contribute to its earnings by fostering advancements in semiconductor production technology.
Lam Research Financial Statement Overview
Summary
Lam Research exhibits strong financial health with high profitability and efficiency, supported by a robust balance sheet and excellent cash flow management. Despite a slight revenue dip, the company's financial performance is solid, positioning it well in the semiconductors and equipment industry.Income Statement
Lam Research showed strong performance in its income statement with high gross and EBIT margins, reflecting efficient operations and robust profitability. The company experienced a minor decline in revenue compared to the previous year but maintained healthy net profit margins, indicating stable profitability in a competitive industry.88
Very Positive
Balance Sheet
The balance sheet displays a solid financial position with a favorable debt-to-equity ratio, suggesting manageable leverage. The equity ratio is substantial, reflecting a strong equity base supporting its assets. The return on equity is impressive, highlighting effective utilization of shareholder funds to generate profits.85
Very Positive
Cash Flow
Cash flow analysis reveals excellent free cash flow growth and robust operating cash flow relative to net income, showcasing efficient cash management. The company has demonstrated strong free cash flow generation, which supports future investments and shareholder returns.90
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 16.21B | 14.91B | 17.43B | 17.23B | 14.63B | 10.04B |
| Gross Profit | |||||
| 7.74B | 7.05B | 7.78B | 7.87B | 6.81B | 4.61B |
| EBIT | |||||
| 4.82B | 4.26B | 5.17B | 5.38B | 4.48B | 2.67B |
| EBITDA | |||||
| 5.33B | 4.91B | 5.64B | 5.72B | 4.79B | 2.94B |
| Net Income Common Stockholders | |||||
| 4.29B | 3.83B | 4.51B | 4.61B | 3.91B | 2.25B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 678.55M | 5.85B | 5.37B | 3.66B | 5.73B | 6.71B |
| Total Assets | |||||
| 2.32B | 18.74B | 18.78B | 17.20B | 15.89B | 14.56B |
| Total Debt | |||||
| 20.31M | 4.98B | 5.01B | 5.01B | 5.00B | 5.81B |
| Net Debt | |||||
| -441.06M | -864.52M | -325.51M | 1.48B | 583.42M | 895.55M |
| Total Liabilities | |||||
| 679.91M | 10.21B | 10.57B | 10.92B | 9.86B | 9.38B |
| Stockholders Equity | |||||
| 1.64B | 8.54B | 8.21B | 6.28B | 6.03B | 5.18B |
| Cash Flow | Free Cash Flow | ||||
| 4.35B | 4.26B | 4.68B | 2.55B | 3.24B | 1.92B |
| Operating Cash Flow | |||||
| 4.56B | 4.65B | 5.18B | 3.10B | 3.59B | 2.13B |
| Investing Cash Flow | |||||
| -479.90M | -370.61M | -534.56M | 612.27M | 73.27M | -244.08M |
| Financing Cash Flow | |||||
| -4.00B | -4.00B | -2.83B | -4.58B | -4.17B | -623.93M |
Lam Research Technical Analysis
Negative
62.39
Price Trends
75.01
Negative
75.71
Negative
78.65
Negative
Market Momentum
-3.17
Positive
40.35
Neutral
35.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LRCX, the sentiment is Negative. The current price of 62.39 is below the 20-day moving average (MA) of 68.17, below the 50-day MA of 75.01, and below the 200-day MA of 78.65, indicating a bearish trend. The MACD of -3.17 indicates Positive momentum. The RSI at 40.35 is Neutral, neither overbought nor oversold. The STOCH value of 35.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LRCX.
Lam Research Risk Analysis
Lam Research disclosed 30 risk factors in its most recent earnings report. Lam Research reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lam Research Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $80.09B | 18.96 | 50.42% | 1.40% | 13.21% | 27.25% | |
78 Outperform | $110.13B | 17.73 | 35.19% | 1.16% | 4.45% | -10.01% | |
78 Outperform | $254.81B | 32.12 | 55.21% | 0.89% | 16.46% | 21.29% | |
74 Outperform | $11.23B | 21.02 | 20.29% | 0.67% | 5.52% | 16.59% | |
74 Outperform | $82.50B | 26.11 | 96.81% | 0.99% | 12.19% | 20.80% | |
62 Neutral | $841.72M | 36.01 | 2.77% | ― | 20.92% | ― | |
58 Neutral | $9.82B | 10.00 | -6.63% | 3.09% | 7.49% | -11.58% |
* Technology Sector Average
Performance Comparison
LRCX
Lam Research
62.39
-25.38
-28.92%
AMAT
Applied Materials
135.56
-56.07
-29.26%
ASML
ASML Holding
624.69
-270.48
-30.22%
KLAC
KLA
620.80
-21.67
-3.37%
TER
Teradyne
69.81
-29.64
-29.80%
UCTT
Ultra Clean Holdings
18.85
-20.90
-52.58%
Lam Research Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -16.72% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
Lam Research reported strong financial results for 2024, with significant growth in CSBG and advanced packaging, and strategic investments paying off. However, challenges in China and customer concentration headwinds pose potential risks.Highlights
Strong Financial Performance
Lam Research reported a revenue of $16.2 billion and diluted earnings per share of $3.36 for calendar year 2024, exceeding expectations. CSBG revenue increased 11% to $6.6 billion.
Record Gross Margin
Gross margin for 2024 was 48.2%, the highest annual result since the merger with Novellus in 2013.
Advanced Packaging and Technology Growth
Lam's shipments for gate-all-around nodes and advanced packaging grew to exceed $1 billion in 2024, with expectations to surpass $3 billion in 2025.
Strategic Investments Paying Off
Lam's strategic investments in R&D and infrastructure have led to significant product advances, such as Cryo 3.0 and Aether dry-resist solutions.
Customer Support Business Group Growth
CSBG generated $1.8 billion in revenue for the December quarter, with a 20% increase over the same period in 2023.
Lowlights
Challenges in China
China revenue accounted for 31% in the December quarter, down from 37% in the prior quarter. New regulations in December impacted a forecasted $700 million from restricted Chinese customers.
Decreased Revenue from Mature Nodes
Foundry revenue decreased from 41% in the September quarter to 35% in the December quarter due to reduced spending in mature nodes.
Customer Concentration Headwinds
Customer concentration is expected to remain a headwind, affecting margins as Lam's customer mix evolves.
Company Guidance
During the Lam Research earnings call for the December 2024 quarter, the company reported solid performance, with revenue of $4.38 billion, gross margin at 47.5%, operating margin at 30.7%, and earnings per share (EPS) of $0.91, all surpassing guidance midpoints. The Customer Support Business Group (CSBG) revenue increased by 11% to $6.6 billion for the year, and the installed base grew to 96,000 chambers. Lam anticipates wafer fabrication equipment (WFE) spending to rise slightly to about $100 billion in 2025, driven by technological advances. The company expects over $3 billion in shipments to gate-all-around nodes and advanced packaging. Lam highlighted strategic investments in R&D and operations, including the Cryo 3.0 technology and Aether dry-resist solution, contributing to a 160 basis point improvement in operating margin for 2024.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.