Stock Analysis

Lam Research Corporation Just Beat EPS By 5.7%: Here's What Analysts Think Will Happen Next

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Lam Research Corporation (NASDAQ:LRCX) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Lam Research reported US$3.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$7.34 beat expectations, being 5.7% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Lam Research

NasdaqGS:LRCX Earnings and Revenue Growth April 26th 2024

After the latest results, the 27 analysts covering Lam Research are now predicting revenues of US$17.7b in 2025. If met, this would reflect a substantial 24% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 26% to US$34.70. Before this earnings report, the analysts had been forecasting revenues of US$17.6b and earnings per share (EPS) of US$34.35 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$971, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Lam Research analyst has a price target of US$1,200 per share, while the most pessimistic values it at US$680. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lam Research's past performance and to peers in the same industry. It's clear from the latest estimates that Lam Research's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 17% per year. Lam Research is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lam Research analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Lam Research that you should be aware of.

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Find out whether Lam Research is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.