Is it time to buy or sell Lam Research stock as shares fall after FQ1 results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 21, 2021
  • Lam Research shares on Thursday fell 2.32% after announcing its most recent quarterly results.
  • The company reported its FQ1 earnings Wednesday after markets closed, beating the consensus Street estimates.
  • However, revenue for the quarter came slightly below estimates despite growing by 35% Y/Y.

On Thursday, Lam Research Corp (NASDAQ:LRCX) shares declined by 2.32% after announcing its most recent quarterly results. The company reported its FQ1 earnings Wednesday after markets closed, beating the average for analyst estimates. However, Lam’s revenue for the quarter fell short of expectations despite posting solid growth.

The company posted FQ1 non-GAAP earnings per share of $8.36, outperforming the consensus Street estimate of $8.20. Moreover, its GAAP EPS of$8.27, was $0.17 ahead of estimates, while revenue for the quarter of $4.3 billion missed expectations by $20 million, despite increasing by 35.2% from the same quarter a year ago.

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The company also issued solid FQ2 revenue and non-GAAP EPS guidance, of about $4.4 billion and $8.45, respectively ahead of the consensus Street forecast of $4.39 billion and $8.41.

Should you bet on Lam’s exciting growth?

From an investment perspective, Lam shares trade at a reasonable P/E ratio of 18.65 and a compelling P/E of 13.76, making it a compelling option for value investors. 

In addition, analysts expect Lam’s earnings per share to grow by more than 78% this year before rising at an average annual rate of 15.72% over the next five years.

Therefore, growth investors could also find it as an appealing option for their portfolios. 

Source – TradingView

Technically, LRCX seems to be trading within a gently descending channel formation in the intraday chart. The stock pulled back recently to move closer to the trendline support, creating an opportunity for a rebound.

Therefore, although Lam is yet to reach oversold conditions, investors could target potential rebounds at $588.86, or higher at $619.66, while $517.15 and $485.45 are support levels.

Time to target a rebound?

In summary, although Lam missed revenue expectations for FQ1, the stock trades at attractive valuation multiples whilst offering exciting growth prospects.

Therefore, it could be time to bet on a potential rebound after finding the trendline support.

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