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Lam Research stock keeps equal weight rating

EditorAhmed Abdulazez Abdulkadir
Published 05/22/2024, 07:44 PM
LRCX
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On Wednesday, Wells Fargo maintained its Equal Weight rating on Lam Research (NASDAQ:LRCX), keeping the price target steady at $980.00. Lam Research has recently announced an additional $10 billion share repurchase program, which does not have an expiration date.

This new allocation adds to the remaining $1.06 billion from the previous authorization, which was announced in May 2022, and was still available at the end of the March quarter. The total authorization for buybacks now corresponds to approximately 9% of the company's current market capitalization, aligning with past authorizations.

Lam Research reported having $5.7 billion in cash and investments at the close of the March quarter, with net cash positioned at $615 million. In another significant move, the company has declared a 10-for-1 stock split, scheduled to take effect after the market closes on October 2, 2024. This action is designed to broaden participation in the company's employee stock plans across its global workforce.

The firm's strategy reflects confidence in the ongoing demand and free cash flow (FCF) generation. This approach is consistent with Lam Research's capital allocation strategy, which was detailed during its Analyst Day in March 2020. The strategy aims to return 75%-100% of FCF to shareholders, with a history of increasing dividends annually following the company's board meeting in August.

Over the trailing twelve months, Lam Research has invested $3.33 billion in share repurchases, which represents 74% of its FCF during the same period. The total return to shareholders stands at 95%.

InvestingPro Insights

As Lam Research (LRCX) continues to demonstrate its financial stability and shareholder commitment with its recent share repurchase program and stock split announcement, InvestingPro data and tips provide additional context for investors. The company's market capitalization stands at a robust $126.03 billion, and despite a high P/E ratio of 35.2, the firm's consistent dividend growth, with a 10-for-1 stock split on the horizon, reflects a shareholder-friendly orientation. Notably, Lam Research has raised its dividend for 10 consecutive years, a testament to its solid financial health and commitment to returning value to its shareholders.

An InvestingPro Tip highlights that 17 analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's performance. Moreover, Lam Research is a prominent player in the Semiconductors & Semiconductor Equipment industry, which is essential for understanding its market position and future growth potential. However, analysts do anticipate a sales decline in the current year, and net income is expected to drop, which investors should consider in their analysis.

For those interested in a deeper dive into Lam Research's financial metrics and further strategic insights, InvestingPro offers additional tips, with the full list including insights such as volatility trends, liquidity assessments, and profitability forecasts. To access these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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