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Technology Stocks : Semi Equipment Analysis
SOXX 296.74+1.8%Nov 28 4:00 PM EST
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To: The Ox who wrote (85424)8/4/2020 10:32:36 PM
From: Clear Eyed1 Recommendation

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I’m going to take your query at face value and assume you aren’t short. But if you are short you may want to cover. A few points flushing this out:

1. Back in fiscal 2018 there was a major tax adjustment because of new trump administration led tax legislation that resulted in an increase in non-gaap earnings of over 20%.

2. Lam’s Installed base business is 40% greater than it was back then.

3. Lam has given 2023/2024 non-gaap eps guidance that’s in the mid $30s per share. And if you follow lam’s logic, that may prove conservative.

4. We are coming out of two years of muted memory wfe spend and it is about to inflect meaningfully higher for a number of quarters.

5. Lam’s share count is meaningfully lower than it was in 2018 which should provide significant eps leverage.

6. Lam has and continues to make significant inroads in foundry and logic.

7. Street estimates have been and are likely to continue to be (for the medium term) materially below likely results. Lam is a classic sandbagger and its product roadmap and best in class vertical scaling tools (as well as arguably best in class installed base biz and significant ability to drive accelerated financial results through accretive share repurchase) position lam very well for the medium term.

What the market isn’t looking back to is 2018. The market is looking out to 2021. And if the market starts buying into lam’s calendar 2023 outlook, the stock looks very cheap.
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