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On Thursday, Evercore ISI demonstrated confidence in Lam Research Corporation (NASDAQ:LRCX) by raising its price target from $95.00 to $99.00, while maintaining an Outperform rating on the stock. The adjustment follows Lam Research’s recent financial performance, which marked the company’s second consecutive quarter of beating expectations and raising future guidance. According to InvestingPro data, the company maintains strong financial health with a 47.7% gross profit margin and 13.2% revenue growth over the last twelve months.
The firm’s analysts highlighted that despite a 37% compression in the stock’s multiple from its peak to trough this cycle, market sentiment remains negative towards the semiconductor sector, particularly within the Semiconductor Capital Equipment (SCE) segment. Lam Research’s stock has underperformed, a trend that Evercore ISI suggests is due to the market pricing in anticipated cuts that the firm believes will not occur. The stock currently trades at a PEG ratio of 0.74, suggesting potential undervaluation relative to its growth prospects. InvestingPro analysis reveals 12+ additional insights about Lam Research’s valuation and growth potential.
Evercore ISI emphasized the potential underestimation by investors of the technological advancements within the SCE space, citing several key areas where Lam Research is poised to benefit. These include upgrades and new equipment for 200+ layer NAND used in enterprise SSDs, equipment for Advanced Packaging (NYSE:PKG) and High-Bandwidth Memory (HBM), Back-Side Power requiring additional etch and deposition layers, and the transition to Gate-All-Around (GAA) transistors, which are more complex than the current FinFET transistors.
The firm’s statement underscored their belief in Lam Research’s ability to continue delivering slight upside to consensus estimates through 2025, driven by the company’s consistent execution. This stance is supported by the current depressed price-to-earnings (P/E) multiple, which Evercore ISI views as an attractive entry point for investors.
Evercore ISI’s analysis suggests a robust outlook for Lam Research, based on the company’s performance and the anticipated demand for its semiconductor equipment. The raised price target to $99.00 reflects the firm’s confidence in Lam Research’s future prospects within the evolving technological landscape of the semiconductor industry. The company has demonstrated strong shareholder returns, maintaining dividend payments for 12 consecutive years with a 15% dividend growth rate. For deeper insights into Lam Research’s financial health and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro, covering over 1,400 top US stocks.
In other recent news, Lam Research Corp reported impressive financial results for Q1 2025, exceeding both earnings per share (EPS) and revenue expectations. The company posted an EPS of $1.04, surpassing the forecasted $1.00, and generated $4.72 billion in revenue, beating the anticipated $4.63 billion. This marks a significant achievement for Lam Research, as it also reported record gross margins and strong foundry revenues. The company has projected Q2 2025 revenue guidance of $5 billion, plus or minus $300 million, indicating potential continued growth. Additionally, Lam Research has been focusing on increasing its research and development spending to support future growth, which was highlighted by CEO Tim Marcher’s expression of confidence in the company’s ability to outperform the semiconductor industry’s growth. The company’s recent performance was bolstered by its strategic focus on leading-edge foundry logic technologies and geographic revenue diversification. Analysts from firms such as Cantor Fitzgerald and UBS have engaged with Lam Research on various aspects of its business strategy, including the sustainability of the NAND upgrade cycle and tariff impacts. These developments underscore Lam Research’s strong position and strategic initiatives in the semiconductor industry.
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