Lam Research (NASDAQ:LRCX) to Buy Back $25 billion in Shares

Key Points

• Lam Research’s board authorized a $25 billion share repurchase, allowing the company to buy back up to 9% of its outstanding shares.
• The stock fell 16.3% during Thursday’s trading, closing at $185.41, amid broader concerns about semiconductor-equipment spending and sector profitability.
• Quarterly results modestly topped analyst expectations: EPS was $2.20 versus $2.18 expected, and revenue reached $8.22 billion, up 54.4% year over year.

Lam Research (NASDAQ:LRCX - Get Free Report) announced that its Board of Directors has authorized a share repurchase plan on Thursday, November 5th, RTT News reports. The company plans to repurchase $25 billion in outstanding shares. This repurchase authorization authorizes the semiconductor company to buy up to 9% of its shares through open market purchases. Share repurchase plans are usually an indication that the company's board of directors believes its stock is undervalued.

Analyst Ratings Changes

Several research analysts recently weighed in on the stock. HSBC restated a "hold" rating and issued a $333.00 price objective on shares of Lam Research in a research report on Monday, July 27th. Wall Street Zen upgraded Lam Research from a "hold" rating to a "buy" rating in a research report on Saturday, October 24th. Needham & Company LLC lowered their target price on Lam Research from $390.00 to $290.00 and set a "buy" rating for the company in a research note on Thursday, October 22nd. Evercore set a $315.00 target price on Lam Research in a research report on Tuesday, October 20th. Finally, Stifel Nicolaus upped their price target on Lam Research from $325.00 to $425.00 and gave the company a "buy" rating in a research note on Friday, July 10th. Twenty-six analysts have rated the stock with a Buy rating and six have given a Hold rating to the company. According to MarketBeat.com, the stock has an average rating of "Moderate Buy" and an average target price of $360.23.

Lam Research Trading Down 16.3%

Shares of LRCX stock traded down $36.02 during trading hours on Thursday, reaching $185.41. The company had a trading volume of 31,297,422 shares, compared to its average volume of 11,545,254. The company has a 50 day moving average of $286.73 and a 200 day moving average of $283.78. The company has a debt-to-equity ratio of 0.27, a current ratio of 2.48 and a quick ratio of 1.86. The firm has a market cap of $231.61 billion, a price-to-earnings ratio of 32.76, a P/E/G ratio of 0.82 and a beta of 1.97. Lam Research has a 1-year low of $135.50 and a 1-year high of $438.50.

Lam Research (NASDAQ:LRCX - Get Free Report) last posted its quarterly earnings results on Wednesday, October 21st. The semiconductor company reported $2.20 earnings per share (EPS) for the quarter, topping the consensus estimate of $2.18 by $0.02. The business had revenue of $8.22 billion for the quarter, compared to analyst estimates of $8.14 billion. Lam Research had a return on equity of 72.15% and a net margin of 32.34%. The firm's revenue was up 54.4% on a year-over-year basis. During the same period last year, the company earned $1.26 EPS. On average, equities research analysts anticipate that Lam Research will post 9.59 EPS for the current year.

Lam Research Increases Dividend

The business also recently announced a quarterly dividend, which was paid on Wednesday, October 14th. Shareholders of record on Wednesday, September 23rd were issued a dividend of $0.33 per share. This represents a $1.32 dividend on an annualized basis and a yield of 0.7%. This is an increase from Lam Research's previous quarterly dividend of $0.26. The ex-dividend date was Wednesday, September 23rd. Lam Research's dividend payout ratio (DPR) is 19.67%.

Key Headlines Impacting Lam Research

Here are the key news stories impacting Lam Research this week:

• Positive Sentiment: The board approved a $25 billion share repurchase authorization, allowing Lam to buy back up to 9% of its outstanding shares, and declared a quarterly dividend of $0.33 per share. The buyback may support demand for the stock and signals management’s willingness to return capital. Company announcement
• Negative Sentiment: Reports attributed the selloff to investors reconsidering AI-related semiconductor-equipment spending and the sustainability of the sector’s recent profitability. That uncertainty may weigh on Lam, whose business depends on semiconductor manufacturers’ investment cycles. Article on semiconductor-equipment investors reassessing AI spending
• Negative Sentiment: Lam’s latest outlook also highlighted execution risks: management expects component shortages and a near-term decline in China-related revenue. The company forecast December-quarter revenue of about $8.6 billion and diluted EPS near $2.33, so investors may focus on whether supply and regional headwinds affect delivery of those targets. Article on Lam’s guidance
• Neutral Sentiment: One report said the stock’s sharp drop had no clear company-specific catalyst, suggesting broader market or sector positioning may also have contributed. Article on Lam Research’s share-price move

Insider Transactions at Lam Research

In other news, insider Ava Harter sold 5,000 shares of the business's stock in a transaction dated Monday, August 31st. The stock was sold at an average price of $302.46, for a total transaction of $1,512,300.00. Following the completion of the transaction, the insider directly owned 42,462 shares in the company, valued at approximately $12,843,056.52. The trade was a 10.53% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Bethany Mayer sold 9,557 shares of the company's stock in a transaction dated Wednesday, September 9th. The shares were sold at an average price of $314.74, for a total value of $3,007,970.18. Following the completion of the sale, the director directly owned 20,995 shares of the company's stock, valued at approximately $6,607,966.30. This trade represents a 31.28% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. 0.31% of the stock is currently owned by company insiders.

About Lam Research

Lam Research Corporation NASDAQ: LRCX is a semiconductor equipment company that develops and manufactures systems used to fabricate integrated circuits. Its technologies support key stages of wafer processing, helping semiconductor manufacturers create the increasingly complex structures found in memory, logic and other types of chips.

The company's product portfolio includes etch systems, which selectively remove materials from wafers; deposition systems, which apply thin films; and cleaning solutions used to remove contaminants and residue during manufacturing.

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