Canopy Growth stock tumbles after announcing $200 million share sale plan
On Wednesday, Citi reiterated its Buy rating on Lam Research (NASDAQ:LRCX) shares, maintaining a price target of $87.00. This aligns with broader analyst sentiment, as InvestingPro data shows 24 analysts have recently revised their earnings expectations upward for the upcoming period. With a strong market capitalization of $112.8 billion and impressive return on equity of 50%, Lam Research demonstrates robust fundamentals. The reaffirmation came after Lam Research’s Investor Day, which highlighted the company’s strategic focus on expanding its serviceable available market (SAM) that is expected to outgrow the wafer fabrication equipment (WFE) market, capturing share at technological inflection points, and driving robust growth in its Customer Support Business Group (CSBG).
Lam Research anticipates its SAM to increase from the low 30% of WFE to the high 30%, with ambitions to secure more than 50% of the incremental SAM. The company outlined upgrade opportunities and technology shifts in NAND, where layer counts are rising from below 200 to over 500, and in DRAM, transitioning from 6F2 to 4F2 and eventually to 3D DRAM. Additionally, advancements in Foundry/logic from FinFET to next-generation technologies like GAA and CFET were discussed.
The company’s management expects artificial intelligence data center investments to fuel a $200 billion leading-edge WFE market over the next five years. Assuming a mid-to-high single-digit growth rate for WFE, Lam Research has set a target model for calendar year 2028, aiming for revenues of $26 billion and earnings per share (EPS) of $6.50 at market performance. These ambitious targets build on the company’s current strong performance, with InvestingPro data showing a 13.2% revenue growth in the last twelve months and a healthy gross profit margin of 47.7%. This projection surpasses Citi’s previous expectations of approximately $23.5 billion in revenue and $5.40 in EPS, thanks to a predicted 10%+ compound annual growth rate (CAGR) in CSBG from CY2024, despite anticipated headwinds in the Reliant segment in 2025, and an anticipated gross margin of around 50%.
The company’s confidence in these targets is driven by its strategic initiatives to capitalize on technology inflections and its favorable outlook on AI data center investments. Citi’s endorsement of Lam Research’s stock reflects optimism in the company’s growth trajectory and its ability to outperform in the semiconductor equipment industry. InvestingPro analysis reveals the company maintains a strong financial position with a current ratio of 2.54 and operates with moderate debt levels. Subscribers can access over a dozen additional ProTips and comprehensive financial metrics in the detailed Pro Research Report, providing deeper insights into LRCX’s investment potential.
In other recent news, Lam Research Corporation has introduced two new tools aimed at boosting AI chip production. The ALTUS Halo deposition tool and the Akara etching tool are designed to enhance semiconductor performance and precision. This strategic move aligns with Lam Research’s previous revenue projections, which exceeded market expectations due to heightened demand from chip manufacturers. During a recent investor day, the company projected significant revenue and earnings growth by 2028, forecasting revenues between $25 billion to $28 billion and adjusted earnings per share of $6 to $7. Cantor Fitzgerald maintains an Overweight rating on Lam Research, anticipating a bullish outlook and a potential increase in earnings power by 2028. Additionally, Lam Research declared a quarterly dividend of $0.23 per share, reflecting its commitment to returning value to shareholders. The company’s financial strength is underscored by its growing installed base and strategic plans to expand its market presence. These developments position Lam Research as a key player in the competitive semiconductor industry.
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