BofA Raises Price Target#
BofA Securities has increased its price target for Lam Research (NASDAQ:LRCX) from $285 to $330 while maintaining a Buy rating. This adjustment reflects the company's impressive quarterly performance, which exceeded sales and earnings expectations.
Strong Quarterly Results#
In its latest earnings report, Lam Research showed sales that were 2% higher than anticipated and earnings per share (EPS) that surpassed expectations by 8%. The guidance for the upcoming quarter also looks promising, with projections for sales and earnings 9% and 14% above consensus estimates, respectively. Currently, Lam Research shares are trading at $265.55, close to their 52-week high of $273.50. Over the past year, the stock has increased by over 300%, although some analysts suggest it may be overvalued based on its Fair Value estimate.
Improved Margins and Future Outlook#
The company's gross margins improved by about 1% to 50.5%, thanks to better operational efficiency and product mix. Analyst Vivek Arya from BofA noted that clients are confidently discussing plans for 2028, buoyed by long-term agreements with memory suppliers. Additionally, BofA has raised its estimate for the wafer fabrication equipment market in 2026 to $140 billion, anticipating growth as new cleanroom space becomes available.
Earnings Estimates Adjusted#
BofA has also revised its earnings per share estimates for Lam Research, increasing them by 12% and 33% for the years 2026 and 2027, respectively, now projecting EPS of $9.21 and $10.31. The new price target of $330 is based on a multiple of 36 times the estimated earnings for 2027, down from a previous multiple of 41. This reflects a cautious yet optimistic outlook for the company as it continues to grow in the semiconductor equipment sector.