Stock Analysis

Lam Research Corporation (NASDAQ:LRCX) Released Earnings Last Week And Analysts Lifted Their Price Target To US$872

NasdaqGS:LRCX
Source: Shutterstock

As you might know, Lam Research Corporation (NASDAQ:LRCX) recently reported its second-quarter numbers. Lam Research reported US$3.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$7.22 beat expectations, being 3.9% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Lam Research

earnings-and-revenue-growth
NasdaqGS:LRCX Earnings and Revenue Growth January 31st 2024

Taking into account the latest results, the most recent consensus for Lam Research from 27 analysts is for revenues of US$14.7b in 2024. If met, it would imply a reasonable 3.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 6.1% to US$27.97. In the lead-up to this report, the analysts had been modelling revenues of US$14.7b and earnings per share (EPS) of US$27.25 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 13% to US$872. 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$980 per share, while the most pessimistic values it at US$660. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Lam Research's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. Factoring in the forecast slowdown in growth, it seems obvious that Lam Research is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Lam Research following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 forecasts for Lam Research going out to 2026, and you can see them free on our platform here.

We also provide an overview of the Lam Research Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Valuation is complex, but we're helping make it simple.

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.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.