Lam Research, KLA Corp., Applied Materials may have rough 2023, MS says
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Lam Research (NASDAQ:LRCX), KLA Corp. (NASDAQ:KLAC) and Applied Materials (NASDAQ:AMAT) traded mixed on Monday as investment firm Morgan Stanley cut 2023 earnings estimates, citing worries over cuts to semiconductor equipment spending.
A team of analysts, led by Joseph Moore, noted that in the near-term, wafer fab equipment is still supply constrained, but that may not to be the case next year. 
"[Wafer fab equipment] forecasts remain difficult, with demand for equipment softening, but not enough to bring supply constraints to an end near term, and conditions generally becoming more challenging; we are trying to derisk our estimate by bringing down our [2023] assumption from $90 [billion] or so to about $83 [billion]," the analysts wrote.
The analysts added that the supply constraints could bring down wafer fab equipment sales in 2022 to roughly the mid $90B, down from $100B, but that could also move demand to 2023.
Regarding Lam Research (LRCX), the analysts cut their adjusted earnings per share to $30.55, down from $36.74, given its "high memory exposure." They also lowered the price target to $550 from $625, but kept the firm's overweight rating.
On KLA Corp. (KLAC), the analysts lowered their adjusted earnings estimates to $20.94 per share, down from $23.31, as it has high exposure to logic, but the analysts said logic is still "near peak levels." The analysts also tweaked the price target to $373, down from $377. 
For Applied Materials (AMAT), the analysts lowered the estimated 2023 earnings to $6.38, down from $8.32 and cut the price target to $115 from $133.
Morgan Stanley admitted that there is "a fair amount of guesswork" in 2023 estimates for wafer fab equipment, but added that "there are multiple reasons to fear downward revision." 
Earlier this month, Bank of America said KLA Corp. (KLAC) and Applied Materials (AMAT) would be among several semiconductor companies that would likely benefit if the U.S. government passes stimulus for the industry.