Nomura Sees Favorable Trends in Semi Equipment Space Continuing; Lifts PT on Lam Research (LRCX)
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Rating Summary:
24 Buy, 13 Hold, 0 Sell
Rating Trend: Down
Today's Overall Ratings:
Up: 9 | Down: 8 | New: 10
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Nomura Securities analyst Romit Shah expects favorable trends in the Semiconductor Capital Equipment sector to continue and as a results boosted his price target on Buy-rated Lam Research (NASDAQ: LRCX) to $90.00 (from $85.00). Applied Materials (NASDAQ: AMAT) remains the analyst's top pick in the space.
"We agree with the consensus view that wafer front-end (WFE) spending will increase 5-10% in 2015," Shah said. "Our framework for 2016 includes higher capital spending from Intel, driven by 10nm logic. Earnings should continue to grow faster than revenues due to strong operating margin leverage. We believe these multiyear trends back our view that equipment companies are becoming industrialized."
He added, "AMAT remains our top pick, as the merger with TEL will drive significant EPS accretion and substantial capital returns that is not reflected in estimates or the multiple. We think shares of LRCX still have 10+% upside and are raising our price target from $85 to $90, based on a multiple of 14x CY16 EPS of $6.55. We remain Neutral on KLAC, which should see better relative growth in 2015 on the back of strong foundry spending."
For an analyst ratings summary and ratings history on Lam Research click here. For more ratings news on Lam Research click here.
Shares of Lam Research closed at $82.28 yesterday.
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