Applied Materials, KLA Corp Lam Research all initiated with buy ratings at Jefferies
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Jefferies analyst Mark Lipacis initiated coverage on Applied Materials (NASDAQ:AMAT), KLA Corp (NASDAQ:KLAC) and Lam Research (NASDAQ:LRCX) with buy ratings, noting that all three chip equipment makers are leaders in their industry and should generated high free cash flow for the foreseeable future.

Lipacis put a $197 price target on Applied Materials (AMAT), nearly 25% higher than where shares are currently trading, as he believes it will "post the highest [free cash flow] per share growth amongst the three in 2022 at 34%."
Applied Materials (AMAT) shares were slightly lower on Wednesday, trading at $157.86.
KLA Corp (KLAC) owns 50% of the process control market, accounting for 90% of the revenues. Lipacis noted that it has the highest exposure to logic and foundry, which account for 68% of its revenues.
"We view KLAC as the biggest play on Logic/Foundry CAPEX growth, and we believe KLAC has an opportunity to increase its capital return model to 100% from 70% of [free cash flow]," the analyst wrote in the note to investors.
Lipacis has a $515 price target on KLA Corp, which was recently changing hands at $433.60, slightly higher on the day.
Lam Research (LRCX) has higher exposure to the memory market than KLA Corp or Applied Materials, but it also has higher, more predictable services revenue than the other two companies.
Lam Research (LRCX) shares were recently changing hands at $710.12, more than 22% lower than Lipacis' $869 price target.
Last month, Applied Materials (AMAT) expanded its collaboration with the Institute of Microelectronics, a research institute of Singaporeâs Agency for Science, Technology and Research, for an R&D engagement.