KLA Receives Buy Rating and 29% Upside Projection
Santa Clara, Tuesday, 1 April 2025.
KLA Corporation is poised for 29% growth, driven by strategic initiatives and a strong market presence in semiconductor technology, making it a focal point for investors.
Morgan Stanley’s Strategic Upgrade
On March 30, 2025, Morgan Stanley significantly upgraded KLA Corporation (NASDAQ: KLAC) from Equalweight to Overweight, raising the price target to $870 from $748 [1]. The upgrade comes as KLA demonstrates robust financial performance, with Q4 2024 results exceeding expectations - reporting an EPS of $8.20 against a forecasted $7.75, and revenue of $3.08 billion surpassing anticipated $2.94 billion [2].
Growth Projections and Market Position
KLA is projected to outperform the wafer fabrication equipment (WFE) market significantly in the coming years. The company forecasts revenue growth of 8% in 2025 and 12% in 2026, contrasting sharply with the broader WFE market’s expected 3% decline in 2025 and 4% increase in 2026 [2]. This growth trajectory is supported by KLA’s strong market position, with 50 consecutive quarters of growth in its services business [2]. The company maintains a solid financial foundation with a current market capitalization of $89.8 billion and an impressive annual ROE of 102.9% [3].
Analyst Consensus and Market Sentiment
The upgraded outlook is reinforced by broader market confidence, with 18 Wall Street analysts providing a consensus ‘Moderate Buy’ rating. Currently, 12 analysts maintain buy ratings while 6 hold neutral positions [4]. The average twelve-month price target stands at $832.17, suggesting a potential upside of 22.51% from the current trading price of $679.28 as of April 1, 2025 [4]. Notably, Citi analysts have set an even more optimistic price target of $910, while raising EPS forecasts for 2025 and 2026 by 13% and 14% respectively [2].
Challenges and Strategic Considerations
Despite the positive outlook, KLA faces some headwinds, particularly in the Chinese market. The company projects a 20% decline in sales due to export controls [2], with specific guidance indicating a $500 million impact from December 2024 export restrictions [7]. However, analysts expect this challenge to be offset by strength in other markets, particularly TSMC’s operations [7]. The company’s upcoming catalyst events include the March quarter earnings report in late April 2025 and the 2025 Investor Day scheduled for June 18 [7].