UBS Remains bullish as Lam Research (LRCX) Announces KLA Merger Cancellation
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UBS reiterated a Buy rating and $105.00 price target on Lam Research (NASDAQ: LRCX) following the company's announced cancellation of a proposed merger with KLA. UBS had viewed Lam's decision to acquire KLA positively as Lam was addressing additional future growth opportunities. This Lam-KLA merger termination and the recent AMAT-Tokyo Electron termination in Apr-15 will likely mean there will be no more big deals for Lam to consider.
Analyst Stephen Chin commented, "We are disappointed to see that Lam and KLA's review of recent antitrust agency feedback and subsequent options led them to cancel their proposed merger. But we keep a Buy rating on Lam and our 12-month price target remains $105 as our estimates and valuation multiple have been based on Lam stand-alone scenarios. We believe the focus on Lam will return mostly to its strong sales outperformance, especially to NAND customers where it has the highest average at 20% of its total the past 3 years. We also believe that Lam has executed well selling its semicap equipment to China (average is 15% of sales the past 3 years). We also believe that if China's big indigenous China fab XMC ever spends $6B to build a new fab, we estimate this could add to Lam's EPS by $1.75."
Shares of Lam Research closed at $96.17 yesterday.
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