Summary

  • Semiconductor manufacturers Applied Materials and Lam Research Corp. received rating upgrades from broker Needham.
  • Applied Materials has a mean recommendation rating of 2.1 on five and the consensus mean price target on AMAT is US$155.46.
  • Lam Research Corp has a mean recommendation rating of 2.1 on five and the consensus mean price target is US$680.14.

Broker Needham recently raised its ratings on semiconductor manufacturers Applied Materials (NASDAQ: AMAT) and Lam Research Corp. (NASDAQ: LRCX). Needham upgraded both stocks to ‘buy’ from ‘hold’.

Commenting on the rating upgrade, Needham stated that it expects Lam Research to be an outperformer in 2024, while it predicts strength from Applied Materials. Needham also stated that semiconductor sales and unit volume could potentially rebound in 2024.

Needham predicts that there will be a change in the types of Wafer Fabrication Equipment (WFE) used in chip manufacturing. This shift is likely to benefit LRCX and have a smaller impact on AMAT compared to companies like ASML Holding NV and KLA Corp. Needham also anticipates that the memory WFE will return to about 40% of the total WFE by 2025.

Currently, the mean recommendation rating on AMAT and LRCX is 2.1 on five. The consensus mean price target on AMAT is US$155.46, an upside potential of 10% on the stock’s closing price on Friday.

Meanwhile, the consensus mean price target on LRCX is US$680.14, an upside potential of 5% over Friday’s closing price.

Applied Materials reports decline in Q3 income

For Q3, Applied Materials reported revenue of US$6.43 billion, which was lower by 1% on a year-on-year basis. The company’s net income was 3% lower for the quarter on a year-on-year basis at US$1.56 billion.

Meanwhile, Applied Materials’ cash from operations was US$2.58 billion in Q3 2023. The cash dividend approved by AMAT’s board is US$0.32 per share, payable on December 14, 2023.

AMAT Price Chart; Source: EODHD/Others

Based on Friday’s closing price of US$141.14, AMAT was around 45% higher on a YTD basis. The stock hit its 52-week high of US$155.26 on September 6, 2023.

As per EODHD/Others data, a majority of fifteen analysts have given AMAT a ‘buy’ rating and eight have given it a ‘strong buy’ rating. At the same time, nine analysts believe it to be a ‘hold’ and one analyst believes it is a ‘sell’.

LRCX stock price rises 1.3% after Needham’s upgrade

Post the rating upgrade from broker Needham, LRCX’s stock price was 1.3% higher on October 13, 2023. The stock closed at US$645.12 on Friday, October 13, 2023. Friday’s closing price marked a YTD increase of 53.5% for the stock.

LRCX Price Chart; Source: EODHD/Others

EODHD/Others data suggests that a total of 37 analysts have covered LRCX. Among these, six have given it a ‘strong buy’ rating and eleven have given a ‘buy’. Meanwhile, 10 analysts recommend holding the stock.

Broker Evercore ISI also raised its rating on LRCX to ‘outperform’. Meanwhile, Wells Fargo maintained an ‘equal weight’ rating. TD Cowen also kept its ‘outperform’ rating intact on LRCX.