Lam Research stock downgraded as Barclays calls recent chip rally a 'head fake'

Shares of Lam Research Corp. were down 1% in premarket trading Monday after Barclays analyst Blayne Curtis cut his rating on the chip-equipment stock to equal weight from overweight as part of a broader note on the chip sector in which he called the recent semiconductor rally a "head fake" in light of double-digit moves by numerous names over the past few weeks. "We don't like much of anything in the group and think the recent bounce only sets a higher bar for the correction coming," Curtis wrote. On Lam specifically, he wrote that while there have already been corrections in the memory market, he sees "an additional 30-40% downside to earnings" as further memory cuts could occur. He models a 21% drop in memory wafer-fab-equipment spending during calendar 2023. "We see a semi correction in 2023/24 and don't see how the equipment used to produce those chips avoids an even larger correction as the market moves to oversupply," he wrote. Lam shares are up more than 19% from their July 5 low of $388.77 but are down 2.6% over the past three months as the S&P 500 has lost 7.3%.

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