Deutsche Bank analysts downgraded shares of Lam Research (NASDAQ:LRCX) to Hold from Buy, raising the stock price target to $725 from $680 per share in a note Tuesday.
The analysts said the firm downgraded LRCX as it believes the stock has already priced in a robust memory capex recovery in 2025. In addition, the downgrade follows the investment bank's reassessment of the risk/reward in the U.S. semicap equipment sector.
"LRCX is currently trading at ~18x CY25E EPS (which already assumes y/y EPS growth of ~40%), vs. a 5-year median multiple of ~17x, and we view the current risk-reward as less appealing, supporting our downgrade," the analysts wrote.
On the overall U.S. semicap equipment market, the investment bank said CY23 has been a very good year, especially for large-cap names, with many of them near all-time highs.
"Investors appear to be willing to look past uncertainties in CY24 and look forward to a strong recovery in wafer fab equipment (WFE) spending in CY25," the analysts added. "We believe CY24 is the year to see if industry spending is tracking to those high expectations, even if that means a full recovery is not until CY25."