This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis.
While markets have grown impatient with LRCX, growing management confidence, strong corporate execution, and long-term macro tailwinds spell opportunity coming
Current market expectations for LRCX are overly pessimistic. Markets expect UAFRS-based (Uniform) ROA to decline from current 30%+ levels, where it appears to be stabilizing, dramatically to 11% over the next few years. The market appears to not recognize the fact that their customer base has consolidated, which has changed the dynamics of demand for the business, and also the market is currently in a supercycle for demand for storage chips which they provide the equipment to make, which can offer the company a prolonged positive cycle. Considering these factors, the company likely has far stronger fundamentals for the next several years than the market recognizes.