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Lam Research (LRCX) Hits 52-Week High on Strong Q3 Results


Shares of Lam Research Corporation LRCX hit a new 52-week high of $152.57 on May 16, before closing a tad lower at $152.56.

The company’s shares have charted a solid trajectory in recent times, increasing more than 108.6% in the last one year, ahead of the Zacks Semiconductor Equipment Wafer Fabrication industry’s gain of roughly 78.2%.

Notably, the company has witnessed a 19.7% jump in share prices in the last one month following its encouraging third-quarter fiscal 2017 results.

Currently, Lam Research holds a Zacks Rank #1 (Strong Buy). Notably, the company has a market cap of $24.6 billion.

Share Price Drivers

Lam Research designs, manufactures, markets and services semiconductor processing equipment used in the fabrication of integrated circuits.

The company reported strong third-quarter results wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Non-GAAP earnings of $2.54 per share were up 16% sequentially and 130.9% year over year. Revenues of $2.15 billion increased 14.4% sequentially and 63.9% year over year.

Moreover, management provided strong guidance for fiscal fourth-quarter 2017. On a non-GAAP basis, the company expects revenues of approximately $2.3 billion (+/- $100 million). Earnings per share are projected at $3 (+/- 10 cents) on a share count of nearly 180 million.

The company continues to witness success in the areas of device architecture, process flow and advanced packaging technology inflections. It has been gaining WFE market share since 2013 and expects the trend to continue.

Lam Research expects increased adoption rates of 3D NAND technology, FinFETs and multi-patterning. The company has initiated cost reduction and density scaling for 3D NAND and new memory technologies.

The company is likely to remain the market leader in dielectric etches as VECTOR Strata and ALTUS deposition and its Flex and Kiyo etch products have been extremely successful so far. It expects strong demand for leading-edge silicon in the enterprise market to continue driven by the long-term move to the cloud, storage and networking applications.

Also, Lam Research has an impressive record of returning cash to shareholders through dividends. The company has a rich history of raising dividends. Recently, Lam paid $73.3 million in cash dividends to its stockholders. Additionally, the company regularly repurchases shares to ensure a steady share count after dilution from stock option vesting.

Other Stocks to Consider

Some other favorably placed stocks in the broader technology sector include KLA-Tencor KLAC and Advanced Energy Industries, Inc. AEIS, each sporting a Zacks Rank #1, while Applied Materials AMAT, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Advanced Energy Industries, Inc. delivered a positive earnings surprise of 10.46%, on average, in the trailing four quarters.

Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.

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