This semiconductor company was recently listed as a possible buyout target in a report from Credit Suisse, citing free cash flow, willingness of acquirers to pay premiums, and the ability to buy technology cheaper than its replacement value.
Lam Research (LRCX)
from Dow Theory Forecasts
Lam Research (LRCX) hiked its quarterly dividend 67% to $0.30 per share, payable July 1. Lam, which yields 1.5% after this latest increase, initiated its payout in April 2014.
Free cash flow slipped 5% to $475 million in the 12 months ended March, but net cash on Lam’s balance sheet rose 12% to $1.60 billion, or $9 per share. Shares rallied on the dividend announcement and an analyst report that key customer Samsung is likely ramping capacity for NAND semiconductors at a higher rate than previously expected.
In April, Lam cited growth in NAND semiconductors, used for solid-state drives, when it issued surprisingly strong June-quarter guidance. Lam said it expects industry-wide spending on wafer-fabrication equipment to increase 6% this year and continue to grow in 2016.
Lam’s revenue surged 23% in calendar 2014, nearly double the industry’s growth. Lam is a Focus List Buy and a Long-Term Buy.
Richard J. Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, May 25, 2015