Lam Research: Soft 3Q Earnings Ahead?
Lam Research (LRCX) is set to report its third quarter 2013 results on Apr 24. In the prior quarter, the company reported in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
The uncertainty in semiconductor capital spending continued, impacting both results and guidance. Modest improvement at foundries helped however. LRCX continues to invest in the business, which resulted in escalating costs and slightly weaker margins.
However, management is positive about the etch business and entered into a strategic collaboration with Axcelis Technologies, Inc. It is optimistic about its prospects in non-oxidizing strip applications for advanced memory and logic applications.
Earnings Whispers?
The Zacks Consensus Estimate for the third quarter stands at 38 cents while that for fiscal 2013 stands at $1.96.
Lam Research posted positive surprises in the three preceding quarters and a negative surprise in the fourth quarter of 2012. This led to an average positive surprise of 11.87% for the four preceding quarters.
There were no estimate revisions for both the third quarter and fiscal 2013 over the past 30 days. As a result, the Zacks Consensus Estimates for both periods have remained unchanged.
The chances of a big surprise are unlikely given the lack of catalysts during the quarter. The stock carries a Zacks Rank #2 (Buy).
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Our model states that a stock needs to have both a positive Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You could, therefore, consider stocks like:
LinkedIn Corp.(LNKD), Earnings ESP of +300.0% and Zacks Rank #3 (Hold)
Intersil Corp.(ISIL), Earning ESP of +62.5% and Zacks Rank #3 (Hold)
Amazon.com(AMZN), Earnings ESP of +100.0% and Zacks Rank #3 (Hold)
Read the Full Research Report on AMZN
Read the Full Research Report on LRCX
Read the Full Research Report on ISIL
Read the Full Research Report on LNKD
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