Lam Research (LRCX) PT Lowered to $105 at B.Riley

B.Riley analyst Craig Ellis lowered the price target on Lam Research (NASDAQ: LRCX) to $105.00 (from $132.50) while maintaining a Buy rating.

The analyst commented: "We expect F1Q25 results modestly above consensus $4.050B (+4.6%)/$0.80 and believe F2Q25 consensus $4.247B (+4.9%)/$0.85 are makeable with our estimates matching and a bit above, respectively. Recall LRCX’s CY24 WFE view is ~$95B. It includes strong leading-edge Foundry/Logic and 1H-weighted Mature Foundry gains led by China, DRAM DDR4 to DDR5 transitions, and AI-related HBM strength. NAND capacity buys are a drag, layer count conversions better, but weakness overall. Advanced Packaging’s high aspect ratio tools are a bright spot for silicon vias (TSV). For 2025, it expects continued LE Foundry/Logic AI strength with tech transitions in gate-all-around architectures (selective etch $1B/100K WPM, ALD), backside power (metalization, deposition; $1B/100K WPM) and Advanced Packaging ($1B opportunity). DRAM strength should persist on HBM (more and higher stacks per GPU), and NAND should rise with conversion and potentially capacity buys. EUV customers remain a dry resist opportunity sized at $1.0B/yr. Regionally, LE Foundry/Logic activity in the US, Japan and Germany could augment sales, while China could moderate but hold decent levels, we believe a view shared by AMAT, ACLS, and others. We suspect headwinds at INTC with its lack of volume. Foundry customers, Samsung’s weak 7/5/3nm yields and customer rosters, and Taylor TX eqp move-in deferrals. On segment matters, we expect F1Q Systems to rebound +HSD Q/Q and continue that pace for F2Q, while Services rises LSD in F1Q and F2Q. Turning to GM, efficiency initiatives are tailwinds but mix a headwind to drop 150bps to 47.0% in F1Q with steady F2Q action. All that plus opex discipline could stabilize OM’s near 30.0% even as SAM-expansive IT/LT projects fund. Rising inventory efficiency should benefit cash conversion/OCF for continued active share
repurchase. F25 & 26 estimates which are moderately above consensus (source: FactSet) have China and Samsung downside but sk Hynix and TMC upside risks. On stock items, a -7% YTD decline trails the SOX by 28ppt and AMAT and KLAC by 22-23ppt. A 16.8x Consensus F2Y P/E in the T14-year lower half. Reflecting peer multiple compression as NAND expansion remains sluggish, we tick our F2Y P/E target multiple to 23.1x to yield a $105 price target versus a current SS broker range of $75 to $115 with its ~$100 average (source: FactSet), so with 40% upside we reiterate a Buy rating."

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