Morgan Stanley Ups Lam Research
Morgan Stanley raised its investment recommendation on Lam Research (LRCX ) to equal-weight from underweight, citing factors such as the absence of competitive pressures.
The company recently posted better-than-expected first quarter earnings per share of 35 cents, but analyst Timm Schulze-Melander said the quarterly results were not a factor in his upgrade. He said it reflects the absence of competitive pressures from Applied Materials (AMAT ) and Tokyo Electronics that have eased his structural concerns on the company's revenues and earnings per share. Now he sees less competitive headwind from peers in Lam Research's industry group. He raised his 2006 earnings per share estimate to $1.48, his 2007 estimate to $1.71, and his 2008 to $2.02. He says Lam Research has outperformed the semi cap group going into the earnings per share season, and thinks it could see near-term pullback.