Lam Research Gains as Susquehanna Ups Rating, Target Price

Lam Research’s LRCX price target was recently raised by 25% to $250 from $200 by Susquehann. The analyst also raised its rating from Neutral to Strong Positive.

Following the news, Lam’s shares inched up 1%, eventually closing at $190.39. Also, shares of Lam have been steadily treading higher on a 12-month basis. The stock has returned 74.5% compared with the industry’s growth of 57.6%.

Reason for the Hike?

The analyst, Mehdi Hosseini, at Susquehanna, remains positive about the memory spending in the near future.

The strength in memory spending will be 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 analyzed to increase efficiency or drive additional sales depending on the circumstances and the business model of companies.

As memory spending accounts for about 60% of Lam's shipments, the analyst expects the company’s revenues and earnings to grow in the near future.

Hosseini expects Lam’s revenues to grow by at least 5% in 2017-2020 time period. This, along with operating leverage and buybacks, could drive earnings by more than 10% in the same timeframe.

With its sustained focus on growth areas, sound fundamentals, margin expansion and strength within the semiconductor space, Hosseini remains positive about the company’s success in the future.

Conclusion

Lam Research is doing well and continues to succeed in areas such as device architecture, process flow and advanced packaging technology inflections. The company has been improving on its WFE market share significantly since 2013 and expects to make robust gains in 2018.

Management said that strong demand for bit growth in server DRAM and NAND will continue, driven by cloud computing and IoT, thus creating more opportunities for Lam Research in the near future.

Moreover, the company has well-differentiated products and high market share. Also, the company has witnessed strong top-line growth and an expanding bottom line in the last few quarters.

Lam Research Corporation Price and Consensus

 

Lam Research Corporation Price and Consensus | Lam Research Corporation Quote

Other Stocks to Consider

Lamcurrently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are PetMed Express, Inc. PETS, SMART Global Holdings, Inc. SGH and Applied Materials, Inc. AMAT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for PetMed Express, SMART Global and Applied Materials is projected to be 10%, 15% and 12.7%, respectively.

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