KLA (KLAC – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Shane Brett CFA from Morgan Stanley upgraded the rating on the stock to a Buy and gave it a $870.00 price target.
Shane Brett CFA has given his Buy rating due to a combination of factors that suggest KLA is poised for significant growth. One of the primary reasons is KLA’s ability to outpace the wafer fabrication equipment (WFE) market, driven by structural and idiosyncratic factors. The company is expected to benefit from increased process control intensity due to larger die sizes and more design starts, which typically lead to lower yields. Additionally, KLA is anticipated to gain market share in process control, leveraging its advanced technology and data processing capabilities to maintain a competitive edge.
Furthermore, Shane Brett CFA highlights that KLA’s revenue growth projections for 2025-2026 are robust, with an expected increase of 8% and 12%, respectively, compared to a more modest forecast for the WFE market. The target price for KLA’s stock has been raised to $870, reflecting a 29% upside, supported by a higher target multiple of 24x, which is a premium compared to its peers. This premium is justified by KLA’s superior growth prospects and gross margins. Additionally, potential catalysts for a re-rating include strong earnings guidance and strategic opportunities to showcase growth drivers at the 2025 Investor Day.
In another report released on March 28, Citi also maintained a Buy rating on the stock with a $910.00 price target.