Cowen and Company affirms Lam Research (Nasdaq: LRCX) with an Outperform rating and $98 price target following today's 2015 Analyst and Investor day.

Analyst Tim Arcuri offered the following key takeaway from the event: In keeping w/LRCX’s well-laid track record, the company showed that it again achieved prior targets and raised its model yet again, essentially giving us ANOTHER $1/share in EPS relative to last year. For any company besides LRCX, these increases should be met with skepticism, but this company is far and away the class of the industry in setting, meeting and exceeding targets. Additionally, LRCX’s comments throughout the day are in line with our view that Moore's Law is SPLINTERING rather than the conventional wisdom that it is SLOWING; LRCX indicated it actually sees the pace of shrink ACCELERATING.

Arcuri also commented on Lam's updated financial model: While LRCX is not offering a specific view on '16, the company is saying for the first time that WFE looks up, at this point, despite what may be some 3D NAND pull-ins into 2H:15. On this basis, using the financial model, this would imply mid $6's EPS - if one considers that the company is achieving EPS earlier than the models, this would suggest a $7 EPS number is within reach for '16 (Street $5.73 FY16E/$6.07 CY16E). Relative to the new financial model, we cull two highlights: 1) at $35B WFE (just slightly higher than ’15 levels per LRCX), the company’s new model delivers ~10% higher EPS (we have to interpolate its prior model); and 2) for the first time, it offered a credible path to ~$8.40 (mid-pt), albeit at elevated WFE levels of $38B. In terms of opportunity, the company pointed out that its service business contributes 25% of revenue and is expected to grow faster than overall company due to installed base growing (sales CAGR of 13% from ’14-’18). This is particularly true for the etch IB since etch is very spares-intensive, given the nature of the process.

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