Results: Lam Research Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Lam Research Corporation (NASDAQ:LRCX) had a good week, as its shares rose 7.6% to close at US$80.19 following the release of its second-quarter results. Lam Research reported US$4.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.92 beat expectations, being 5.6% 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Lam Research

Taking into account the latest results, the consensus forecast from Lam Research's 30 analysts is for revenues of US$17.7b in 2025. This reflects a decent 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 12% to US$3.74. Before this earnings report, the analysts had been forecasting revenues of US$17.3b and earnings per share (EPS) of US$3.52 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Despite these upgrades,the analysts have not made any major changes to their price target of US$91.12, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Lam Research at US$110 per share, while the most bearish prices it at US$75.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. The analysts are definitely expecting Lam Research's growth to accelerate, with the forecast 20% annualised growth to the end of 2025 ranking favourably alongside historical growth of 8.2% per annum 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 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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$91.12, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Lam Research going out to 2027, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.