Stock of the Day

February 7, 2022

Lam Research (LRCX)

$86.02
-$3.00 (-3.4%)
Market Cap: $114.27B

About Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.

Lam Research Bull Case

Here are some ways that investors could benefit from investing in Lam Research Co.:

  • Lam Research Co. has recently been upgraded by multiple analysts, indicating strong confidence in its future performance. For instance, Sanford C. Bernstein upgraded the stock to "outperform" with a price target increase to $91.00.
  • The company reported earnings per share (EPS) of $0.91, surpassing the consensus estimate of $0.87, showcasing its ability to generate profits effectively.
  • With a current stock price of $82.75, it is trading below the average target price of $95.72 set by analysts, suggesting potential for price appreciation.
  • Lam Research Co. has a solid return on equity of 51.86%, indicating efficient management and strong profitability relative to shareholder equity.
  • The company has declared a quarterly dividend of $0.23 per share, providing a yield of 1.11%, which can be attractive for income-focused investors.

Lam Research Bear Case

Investors should be bearish about investing in Lam Research Co. for these reasons:

  • Despite recent upgrades, some analysts have downgraded their ratings, such as Wolfe Research, which lowered its rating to "peer perform," indicating mixed sentiments in the market.
  • The stock has a relatively high price-to-earnings (P/E) ratio of 25.14, which may suggest that it is overvalued compared to its earnings, potentially limiting upside for new investors.
  • Lam Research Co. has a beta of 1.46, indicating higher volatility compared to the market, which could lead to larger price swings and increased risk for investors.
  • The company’s market capitalization of $106.22 billion may limit its growth potential, as larger companies often face challenges in maintaining high growth rates.
  • Analysts have varying price targets, with some estimates significantly lower than the current stock price, which could indicate uncertainty about future performance.

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