While 2023 will be more difficult than previously anticipated for Lam Research , 2024 should be better, Deutsche Bank said. That's good news for the stock. Analyst Sidney Ho upgraded the semiconductor stock to buy from hold. He increased his price target 30% to $520, which would imply a new upside of 15.5%. Before the upgrade, Ho expected the stock to fall to $400. "While we still see some risks to memory WFE [water fabrication equipment] in the near term, investor expectations are already low enough and should not have a significant impact on LRCX's share price," he said Sunday in a note to clients. "Looking beyond the near term, memory WFE is poised to rebound in CY24, as we believe CY23 memory WFE spend is at unsustainably low levels." Ho said the stock has struggled this year — down 37.4% compared with the start of 2022 — given the fact that it has the most exposure to memory among large-cap technology names. The business has been challenged by the impacts of a restrictive technology export policy and indications from suppliers that their capital expenditures will fall. The analyst said the company's revenue should fall 18% compared with the prior year, slightly larger than the 15% drop previously expected. That will pressure capital expenditures, he said, but share price will not need to fall too far as it has already been hard hit in his view. But Ho said relative revenue should turn a corner from the downswing in 2024, predicting it will come in between flat and up 7% compared with the prior year. Lam's gross margin should rebound in tandem. Another area of spending within the memory space focused on what industry insiders call "foundry" or "logic" is not expected to rebound in 2024 and decline further. But that would be favorable to Lam as its exposure is skewed toward other types of memory technology. — CNBC's Michael Bloom contributed to this report.
