Lam Research (LRCX) Hits 52-Week High: What's Driving The Stock?

Shares of Lam Research Corporation LRCX hit a new 52-week high of $124.49 on Mar 15, before closing a tad lower at $124.17.

The company’s shares have charted a solid trajectory in recent times, appreciating over 17.4% year to date, ahead of the Zacks Semiconductor Equipment - Wafer Fabrication industry’s gain of roughly 9% over the same time frame.

Notably, the company has witnessed a 6.2% jump in share price over the past two months following its encouraging second-quarter fiscal 2017 results.

Currently, Lam Research holds a Zacks Rank #2 (Buy). Notably, the company has a market cap of $19.9 billion.

Share Price Drivers

The company reported strong second-quarter results wherein both earnings and revenues exceeded the Zacks Consensus Estimate. Non-GAAP earnings of $2.24 per share were up 23.7% sequentially and 42.8% year over year. Revenues of $1.88 billion increased 15.3% sequentially and 32% year over year.

Lam Research Corporation Price and Consensus

Moreover, management provided strong guidance for fiscal third-quarter 2017. On a non-GAAP basis, the company expects revenues of approximately $2.350 billion (+/- $75 million). Earnings per share are projected at $2.55 (+/- 10 cents) on a share count of nearly 180 million.

The company continues to see 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 thus far. It anticipates 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.

Moreover, Lam Research is making good progress with its customer support business and anti-trust agency reviews.

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

Other Stocks to Consider

Some other favorably placed stocks in the broader technology sector include ON Semiconductor Corporation ON, Advanced Energy Industries, Inc. AEIS and Alibaba Group Holding Limited BABA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For the current year, while estimates for ON Semiconductor went up 8.7% in the past 30 days, the same for Advanced Energy and Alibaba remained unchanged during the same time frame.

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