Lam Research added to Citi's US Focus List, expected to benefit from NAND memory news flow
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Lam Research (NASDAQ:LRCX) gained in premarket trading on Friday after investment firm Citi added the semiconductor equipment company to its U.S. Focus List, noting that the stock should benefit from positive news flow on NAND memory.
Analyst Atif Malik noted that Micron (MU) reported "record" NAND solid-state drive sales in its most recent quarter. Malik also pointed out that Micron said NAND sales in its upcoming quarter would see faster growth than dynamic random access memory, with NAND growing around 30% in 2022, which could benefit Lam Research.
"We believe equipment stocks have already discounted our $80 [billion] or down 20% [year-over-year] wafer fab equipment in 2023 and buy side expectations have come down to ~$95 [billion] from ~$105 [billion] in January on weakening PC/smartphone demand," Malik wrote in a note to clients.
Malik added that any further reduction in wafer fab equipment expectations for 2023, either due to supply or weak semiconductor demand "will help form a bottom in the group."
Lam Research (LRCX) shares gained slightly less than 0.5% to $538.69 in premarket trading on Friday.
In addition, Malik noted that February year-over-year equipment sales were "down sharply" and are half way through the average peak-to-trough correction level, which the analyst said is "usually a buy signal based on [the] groupâs six month forward stock performance."
In March, Morgan Stanley reiterated that Lam Research (LRCX) was still its top semiconductor pick as the stock had "sold off materially" in recent weeks.