Nucor earnings beat by $0.08, revenue fell short of estimates
On Friday, Cantor Fitzgerald updated its outlook on KLA Corporation (NASDAQ:KLAC), increasing the price target to $875 from the previous $800, while keeping a Neutral rating on the shares. According to InvestingPro data, KLA currently commands a market capitalization of $99.31 billion and trades at a P/E ratio of 33.8x, suggesting a premium valuation relative to peers. The company has demonstrated strong financial discipline, maintaining dividend payments for 20 consecutive years with nine straight years of dividend increases. The adjustment follows KLA’s strong financial performance for the December and March quarters, exceeding analyst expectations and projecting a 5% growth in the Wafer Fabrication Equipment (WFE) market into calendar year 2025. This outlook aligns with the projections provided by KLA’s industry peer, Lam Research (NASDAQ:LRCX).
Analysts highlighted KLA’s potential to surpass the overall WFE market growth despite a $500 million impact from the latest China trade restrictions. The company’s robust position is attributed to several factors, including significant leverage to Taiwan Semiconductor Manufacturing Company’s (TSMC) 2nm process technology, which is anticipated to see a 75 basis point increase in process control intensity compared to the 3nm technology. Additionally, KLA is expected to witness strong growth in its Advanced Packaging (NYSE:PKG) business, with revenue projections exceeding $800 million in 2025, up from $500 million in 2024.
Despite the headwinds from China affecting both equipment sales and service growth, which is now expected to grow at a high single-digit rate rather than the long-term rate of 12-14%, KLA’s overall financial strength appears more robust than the market’s initial anticipation of a 5% contraction in WFE. The firm’s process control and PCB/ICOS/SPTS segments are projected to grow by 10%, with overall revenue growth estimated at 11% in 2025.
Based on these projections, Cantor Fitzgerald anticipates KLA’s earnings per share (EPS) for the calendar year 2025 to reach $32.00, surpassing the consensus estimate of $30.16. InvestingPro analysis reveals the company’s robust financial health with an impressive gross profit margin of 59.68% and revenue growth of 12.15% over the last twelve months. The company’s strong financial position is further evidenced by its healthy current ratio of 2.36 and moderate debt levels. Looking further ahead to 2026, the firm’s more optimistic view of the WFE market has led to an EPS forecast of $37.00, considerably higher than the prior estimate of $35.00 and well above the current consensus of $33.74.
The revised price target of $875 implies a 15% upside from the after-hours trading level. However, Cantor Fitzgerald maintains a Neutral rating on KLA stock, suggesting that there may be greater upside potential in other Semiconductor Equipment & Materials (SPE) stocks. The analysis also notes that if one were to assume more than 10% growth in 2026 or assign a multiple of 24-25 times, the price target could potentially approach $900 to $950.
In other recent news, KLA Corporation has been the focus of several analysts’ updates following strong quarterly performance and optimistic future projections. Needham has lifted KLA’s stock price target to $830, maintaining a buy rating. This decision comes after KLA reported 12.15% revenue growth over the last twelve months and provided a steady revenue run-rate of $3 billion per quarter through 2025. Morgan Stanley (NYSE:MS) followed suit, raising their price target for KLA to $748, citing stronger equipment results. Goldman Sachs also increased their price target to $864, influenced by KLA’s impressive financial results and positive forecasts.
In addition to these upgrades, KLA’s management expects a surge in leading-edge logic manufacturing, which could expand KLA’s share in the wafer fabrication equipment (WFE) market by 2025. Despite projecting a decline in their China business by low-20s percent for 2025, KLA expects growth of over 30% in markets outside of China.
Other recent developments include the robust capital expenditure target for 2025 announced by Taiwan Semiconductor Manufacturing Co., leading to significant gains in shares of semiconductor equipment manufacturers, including KLA Corporation. ASML (AS:ASML) also reported record net sales of €9.3 billion for the fourth quarter of 2024, surpassing expectations. These are the recent developments that provide investors with a snapshot of the sector’s current landscape.
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