FWIW, here is what CSFB had to say about LRCX yesterday prior to the earnings release and conference call. CSFB has an "outperform" rating on LRCX.
<<F3Q (Mar) preview. LRCX will kick-off earnings season for semi-cap companies, reporting F3Q (Mar) results post the close of markets Wed, Apr 12; CC at 5PM EST, dial-in 303.262.2193. We are modeling rev/EPS of $430mm and 63c; consensus is at $424mm and 62c; guidance was $410-$430mm and 57-63c; all estimates include option expense. We expect company to report March orders at mid-point of guidance of 25-30% q/q growth, at ~$515mm; and March shipments inline with guidance at $510mm (up 30% q/q). We expect order exposure to memory to decline from ~80% in Dec to ~50% in March; expect foundries to drive the March order growth.
F4Q (Jun) expectations. We are currently modeling Jun rev/EPS at $500mm and 81c, versus consensus at $467mm and 72c; our estimates are well above consensus, but are consistent with Lam’s strong shipment trends in March, and continued bookings strength into June. Although LRCX’s March order growth of up 25-30% q/q will be above SCE average at up 15-20%, we expect LRCX to guide June orders in line with the rest of the group, at up 5-10% q/q; we think order composition by device should remain more or less unchanged q/q.
A relative out-performer. Our longer-term positive outlook on LRCX is based upon (i) Cheap valuation – stock trading at an 18% discount to peers on ’06 EPS; (ii) Franchise value – Lam’s share gains (see charts) will stick longer due to higher switching costs for etch; and (iii) Growth potential – among large cap SCE, LRCX has most potential to outgrow by expanding into new markets.
Outlook – pay for a Marathon, not a Sprint. In addition to these fundamental positives, there is upside to consensus for March and June as well – that said expect the war cry from bears after the call to be “what else can LRCX do for an encore?” From a purely momentum perspective, there is not much – we think September orders/shipments WILL decline for LRCX (along with everyone else in the group, see model). Of course momentum is important, but in the case of Lam, obsessing on this one metric overlooks:
(i) rather substantial longer-term positives for the company, and (ii) a secular trend of lower peak to trough declines for group. Would still recommend longer-term oriented investors accumulate shares if stock were to show any weakness post earnings.>> |
