LRCX - Embedded Expectations Analysis - 2019 11 27
Lam Research Corporation (LRCX:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.7x Uniform P/E. At these levels, the market has bearish expectations for the firm, and although management appears concerned about gross margin, NAND supply, and growth, potential macro tailwinds and competitive niches in flash storage suggest longer-term upside remains warrantedSpecifically, management may lack confidence in their ability to grow their NAND supply and strengthen their Foundry and Logic positioning. Furthermore, they may lack confidence in their ability to meet gross margin guidance, and they may be concerned about their growth positioning in 2020. Finally, they may lack confidence in their ability to continue allocating SG&A savings to R&D, and they may be concerned about the strength of the DRAM market
However, given long-term industry tailwinds and strong corporate performance, LCRX can likely outperform bearish expectations in the long run, indicating equity upside
is warranted
Lam Research is a supplier of wafer fabrication equipment and services to the semiconductor industry. The company designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company's customer base includes semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory, and logic devices. The company's services include customer service, spares, improvement, and refurbishment of its deposition, etch, and clean products. The company sells its products and services to companies in the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.