Lynx Equity Raises Lam Research Price Target to $400

Lynx Equity on Lam Research (NASDAQ: LRCX): “Closing in on full valuation”.

“We have been raising our WFE estimates in recent months as we do again today (Exhibit 1). We are taking up our 2028 WFE estimate to $240bn.

Of late though, Street estimate revisions may have gotten ahead themselves.

Just as with MU (link), the semicap stocks too appears to be a case of sound multi-year fundamentals running into investor complacency.

Going into the Mar Q earnings call three months ago, we were among the first on the Street to value to company based on 2028 estimates and raise our PT to what was then among the highest on the Street (link).

In recent weeks though, in response to multi-year bullishness expressed by memory suppliers, investor expectations for the semicap sector are looking beyond 2028, into 2029 and beyond.

WFE estimates in the $300+billion range are getting thrown around. From a bottom-up perspective, we think 2029 is too far out for visibility. WFE in the $300+bn range is beyond reach, in our view.

As it stands today, the overall supply capacity is in the $250bn-$275bn range, we think. Also, demand in 2028 is tracking below $250bn, although that could change with time.

Based on our raised WFE estimates, we are raising our earnings estimates for LRCX (Exhibit 3). We are modeling Cy28 earnings at $48.2bn/$13.6 vs. our previous $41bn/$11.

At a 33x eps multiple, we are raising our 2028 target to $450 from our previous $360 (link). Discounted at 8% to the present, our PT works out to $400.

The stock having already traded $400+, the stock may be closing in on full valuation.”

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