Lam Research Shares Down as Results, Guidance Miss Estimates, Analysts Lower Price Targets By Investing.com

Lam Research (NASDAQ:) issued a weaker-than-expected adjusted EPS guidance, sending its shares tumbling nearly 2% in premarket trading.

The water fabrication equipment supplier Q3 adjusted EPS of $7.40, down from $7.49 YoY and below the consensus estimates of $7.52 per share. Revenue came in at $4.06 billion, up 5.5% YoY and below the expected $4.25 billion.

Systems revenue stood at $2.65 billion in the period, missing the consensus of $2.8 billion. Customer support related revenue and other generated $1.41 billion, also below analyst expectations of $1.45 billion.

Lam reported adjusted gross margin of 44.7%, up from 46.3% in the year-ago quarter and compared to the consensus projection of 45%.

For FQ4, the company expects adjusted EPS in the range of $6.5 to $8, missing the estimates of $8.24 per share. It expects revenue in the range of $3.9 billion to $4.5 billion, compared to the consensus estimates of $4.46 billion.

Adjusted gross margin is expected in the range of 43.5% to 45.5%, compared to the expected 45.5%. The company estimates the adjusted operating margin to range between 28.5% and 30.5%, while analysts were looking for 30.8%.

Goldman Sachs analyst Toshiya Hari lowered the price target to $612.00 (down from $648.00 prior) as supply chain issues continue to weigh on results.

“While we expect persistent cyclical concerns to offset any improvement in the supply backdrop in the near term, we maintain our Buy rating on LRCX, as we continue to see the company as a long-term share gainer with potential upside to margins, FCF generation, and capital return,” Hari said in a client note.

Morgan Stanley analyst Joseph Moore also lowered the price target to $625.00 per share from $730.00, but reiterated a Top Pick designation.

“We still see a good setup for the stock here with high 2H backlog alleviating many of the concerns holding the multiple back,” Moore wrote.

By Senad Karaahmetovic