Lam Research (NASDAQ) released a lower-than-expected adjusted guidance for EPS, which sent its shares plummeting nearly 2% during premarket trading.

Water fabrication equipment supplier Q3 reported adjusted earnings per share of $7.40. This is down from $7.49 YoY, and lower than the consensus estimate of $7.52/share. The revenue came in at $4.06 Billion, an increase of 5.5% YoY but below the $4.25 Billion expected.

System revenue stood at $2.65 trillion in the same period as the consensus figure of $2.8 Billion. Revenue from customer support and related services was $1.41billion. This is below analysts’ expectations of $1.45billion.

Lam’s adjusted gross margin was 44.7%, an increase from 46.3% for the same quarter last year. This is compared with the consensus projection of 45.5%.

FQ4: The adjusted EPS is expected to range from $6.5-$8. This misses the estimate of $8.24 per share. This is compared with the consensus estimates at $4.46 trillion. It anticipates that revenue will be in the $3.9-$4.5 billion range.

An adjusted gross margin of between 43.5%-45.5% is anticipated, as opposed to an expected 45.5%. According to the company, adjusted operating margin is expected to be in between 28.5%-30.5% while analysts had been expecting 30.8%.

ToshiyaHari, an analyst for Goldman Sachs, has lowered her price target to $612.00 from $648.00 before. Supply chain problems continue to affect results.

“While we expect persistent cyclical concerns to offset any improvement in the supply backdrop in the near term, we maintain our Buy rating on LRCX, as we continue to see the company as a long-term share gainer with potential upside to margins, FCF generation, and capital return,” Hari said in a client note.

Morgan Stanley analyst Joseph Moore lowered the target price to $625.00 per ounce from $730.00 but retained a Top Pick title.

“We still see a good setup for the stock here with high 2H backlog alleviating many of the concerns holding the multiple back,” Moore wrote.

By Senad Karaahmetovic