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A week ago, Lam Research Corporation (NASDAQ:LRCX) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 3.6% to hit US$3.5b. Statutory earnings per share (EPS) came in at US$5.96, some 5.8% above whatthe analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Lam Research after the latest results.
After the latest results, the 20 analysts covering Lam Research are now predicting revenues of US$13.9b in 2021. If met, this would reflect a decent 17% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 20% to US$24.58. Before this earnings report, the analysts had been forecasting revenues of US$13.1b and earnings per share (EPS) of US$22.83 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Lam Research 19% to US$599on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Lam Research analyst has a price target of US$660 per share, while the most pessimistic values it at US$505. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Lam Research's rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 12%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Lam Research to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lam Research's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Lam Research analysts - going out to 2023, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Lam Research , and understanding them should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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