Lam Research rises as Deutsche Bank upgrades on belief memory capex will 'bottom' in 2023
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Lam Research (NASDAQ:LRCX) shares rose more than 2.5% in premarket trading on Monday as Deutsche Bank upgraded the semiconductor capital equipment company on the belief that spending for memory will "bottom" next year.
Analyst Sidney Ho raised his rating on Lam Research (LRCX) shares to buy, noting that the company has more exposure to memory market than other semiconductor capital equipment companies. But with many of the risks largely known and capital equipment spending having been cut drastically, it's likely that investor expectations are "already low enough" and should not really impact Lam Research's (LRCX) shares.
"Looking beyond the near term, memory [wafer fab equipment] is poised to rebound in [calendar 2024], as we believe [calendar 2023 memory wafer fab equipment] spend is at unsustainably low levels," Ho wrote in a note to clients. In contrast, we believe foundry/logic [wafer fab equipment] spend would decline further in [calendar 2024], and this mix should be particularly favorable to LRCX." 
Ho also noted that Lam Research (LRCX) shares are trading at roughly 14 times estimated 2024 earnings, slightly below Applied Materials (AMAT) and KLA Corp. (KLAC), making the risk-reward "attractive" at current levels.
Separately on Monday, Ho downgraded KLA Corp. (KLAC) shares and cut the firm's estimates on the company for 2023 and 2024.
Earlier this month, investment firm Bernstein tweaked its estimated on Lam Research (LRCX) and Applied Materials (AMAT), as the investment firm now expects wafer fab equipment spending to fall even further than previously believed next year.
Analysts are largely bullish on Lam Research (LRCX). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates LRCX a HOLD.