Citi Comments On Lam Research; Adds To Conviction Sell List

Checks suggest Samsung has very recently decided to push out shipments with Lam Research LRCX in CQ2 and 2H:11 as part of cutting ~$1B out of planned capex for CQ3:11. Based on LRCX shares this means risk to shipments of ~$100MM. To be very clear, this should NOT affect recently closed FQ3:11 results, which should still be strong by all indications, but should materially impact FQ4:11 as it ripples through the supply chain. Citi is further cutting FQ4:11 EPS from $1.30 to $1.24 and cutting 2H such that C2011 EPS goes from $4.89 to $4.37. Additionally, it is cutting F2012 from $4.05 to $3.57 which is well below Street $5.50. While Citi's credibility here isn't great as it was far too early with the Sell rating, it has enough conviction now to add the Sell idea to Top Picks Live!. With the stock having slightly lagged the group YTD and 6mos, Citi realizes some of this is “baked in”. Citi has a $43 PT and Sell rating on LRCX LRCX closed Wednesday at $56.32