Lam Research Expects 2024 To Be A 'Transition Year,' 4 Analysts Provide Key Q3 Takeaways

Lam Research Corporation LRCX reported better-than-expected results for its fiscal third quarter.

Here are some key analyst takeaways from the results, which came amid an exciting earnings season.

• Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating, while raising the price target from $935 to $960.
• Raymond James analyst Srini Pajjuri maintained an Outperform rating and price target of $960.
• Needham analyst Charles Shi reaffirmed a Buy rating and price target of $950.
• KeyBanc Capital Markets analyst Steve Barger reiterated a Sector Weight rating on the stock.

Check out other analyst stock ratings.

Mizuho Securities: Lam Research reported "good" results for its March quarter, with revenues and earnings of $3.8 billion and $7.79 per share, higher than the consensus of $3.72 billion and $7.30 per share, respectively, Rakesh said in a note.

Gross margin came in at a better-than-expected 48.7%. Systems revenue of $2.4 billion represented about 6% year-on-year growth. Customer Support Business Group (CSBG) revenue was $1.4 billion, down 13%. Management's June quarter guidance was in-line with expectations, he added.

Raymond James: Healthy demand from China drove Lam Research's results and outlook, Pajjuri said. "Management raised its CY24 WFE view and maintained its prior expectation for a stronger 2H," he added.

"While China is expected to moderate through the year, cyclical recovery in other regions and secular Gen AI growth should help sustain momentum," the analyst further wrote.

Needham: "While guiding up WFE to low- to mid-$90B from mid- to high-$80B, LRCX management said the increase was mainly due to the higher China lithography spending this year and should not change LRCX’s revenue outlook," Shi wrote in a note.

The company expects NAND to be a "2025 story," the analyst said. Lam Research's commentary implies a NAND WFE pickup in late 2024 to early 2025.

KeyBanc: China demand makes up 42% of Lam’s revenue. Barger also cited “improving System revenue.”

"Overall, LRCX indicated it views 2024 as more of a transition year as it positions for stronger growth in 2025 driven by a NAND recovery and augmented by share gains resulting from technology inflections, including AI-related devices, GAA, backside power, and advanced packaging," the analyst added.

LRCX Price Action: Shares of Lam Research had risen by 2.44% to $906.47 at the time of publication on Thursday.

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