Tuesday, Stifel reaffirmed its Buy rating on Lam Research (NASDAQ:LRCX) with a steady price target of $105.00. The firm anticipates the semiconductor company's fourth-quarter earnings, which are set to be released after the market closes on Wednesday, to meet or slightly exceed estimates. This projection comes despite concerns raised by ASML (AS:ASML)'s recent earnings report, which highlighted a potential decline in China's spending in 2025.
The analyst from Stifel noted that while ASML's results have caused worry about the broader market, particularly regarding China's future spending habits, Lam Research may not be as affected due to different growth comparisons.
However, the analyst advised a cautious approach, expecting some headwinds from China into early to mid-2025. Despite these concerns, the analyst views recent adjustments to wafer fabrication equipment (WFE) forecasts and management's acknowledgment of challenges as positive steps in addressing uncertainties and potentially reducing reliance on higher sales in China.
The report also mentioned that the semiconductor industry has been adjusting to lower growth forecasts, and the upcoming earnings call may provide further insight into Lam Research's position. The analyst suggests that any negative news could help in recalibrating expectations for 2025 and 2026, which might already be reflected in current estimates.
Looking ahead, Stifel sees a shift towards NAND technology and upgrades as a favorable trend for Lam Research. The analyst concluded that after the earnings call, they would re-evaluate their model for the company. The focus on NAND, a type of flash memory, is seen as a positive driver for Lam Research's growth in the context of the current market environment.
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