We up our 12-month target by $50 to $700, 18.4x our CY 23 EPS view of $38.04, near peers. We lift our FY 22 (Jun.) EPS estimate to $34.40 from $33.81 and FY 23 to $37.00 from $36.23. LRCX posts Dec-Q adj-EPS of $8.53 vs. $6.03, beating the consensus by $0.02. Sales declined 2% ($4.23B) sequentially due to component constraints. Gross margin expanded 80 bps sequentially to 46.8% due to Vantex etch system sales (fastest product ramp in Lam history; revenue set to double in CY 22). We are encouraged by LRCX's Customer Support Business Group's (CSBG) growth to $1.49B (vs. $1.38B in Sep-Q), we see this continuing in the future. We expect LRCX to benefit from supply constraints alleviating, product momentum, install-base outperformance (75k in '21, up 13% Y/Y), and strong WFE demand (we expect over $100B in CY 22) in 2022. LRCX printed $1.01B in FCF and repurchased $430M worth of shares in Dec-Q. We expect FCF of $$3.9B in FY 22 and $4.9B in FY 23, and LRCX to return 75%-100% of FCF to investors over the long term.
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