Lam Research stock downgraded only days ahead of its Q2 results

Lam Research Corporation (NASDAQ: LRCX) has been rather painful for its shareholders this year, now down more than 35% versus the start of 2021. More alarmingly, though, a Barclays analyst says a recovery is not on the cards anytime soon.

Lam Research stock will stay put

On Monday, Blayne Curtis downgraded Lam Research stock to “equal-weight” and lowered his price target to $450 a share that’s roughly in line with where LRCX already is at the time of writing.

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He warns of an 11% hit to market-wide sales of water-fabrication equipment in 2023, which could translate to as much as a 40% downside in earnings. In a note to clients, the analyst said:

It’s hard to see Lam Research working with memory cuts. Semi companies continue to signal growth next year, but it seems highly unlikely given memory cuts we’ve already seen and our view on where the overall semi market is headed.

The iShares Semiconductor ETF is now up 15% from its year-to-date low, but Curtis dubs the recent rally a “head fake” and continues to forecast a semi correction in 2023/24.

Joe Terranova agrees with the dovish call

On CNBC’s “Halftime Report”, Virtus Investment Partners’ Joe Terranova agreed that it was “fundamentally” a strong name but the environment was indeed not right to own Lam Research stock.

Their ability to grow their revenue in future quarters is constrained by the challenges right now in the semiconductor industry. There’s not the clear visibility that we thought we would at this time.

The Fremont-headquartered firm is scheduled to report its Q4 results on the coming Wednesday. Consensus is for Lam Research to earn $7.3 a share on $4.21 billion in revenue.