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On Friday, Morgan Stanley (NYSE:MS) updated its outlook on KLA Corporation (NASDAQ:KLAC), increasing its price target to $748 from the previous target of $703, while the firm’s rating for the stock remains at Equalweight. The adjustment follows a period of stronger equipment results that have pushed semiconductor-related stocks upward, despite previously negative market sentiment. According to InvestingPro data, KLA’s stock is currently trading at $742.43, with analyst targets ranging from $655 to $950, reflecting mixed views on the company’s valuation.
The semiconductor equipment maker, known for its process control and yield management solutions, has seen its stock respond positively to industry dynamics. Morgan Stanley’s decision comes with the acknowledgment that while some softening in the market is expected, particularly in the DRAM segment, KLA may be better positioned than peers. The firm cites KLA’s focus on advanced logic and the benefits of longer lead times and higher margins as factors that could help shield the company from market volatility. With a market capitalization of $99.31 billion and strong revenue growth of 12.15% in the last twelve months, KLA has maintained its position as a prominent player in the Semiconductors & Semiconductor Equipment industry. InvestingPro subscribers can access 12 additional key insights about KLA’s market position and financial health.
The price target increase is based on a maintained 21x multiple on the company’s projected CY26 earnings per share (EPS), which Morgan Stanley estimates at $35.60. The new EPS estimate underpins the revised price target, suggesting a confidence in KLA’s financial performance over the next few years. Currently trading at a P/E ratio of 33.83, InvestingPro analysis suggests the stock is trading above its Fair Value. The company has demonstrated strong financial discipline, maintaining dividend payments for 20 consecutive years with impressive dividend growth of 30.77% in the last twelve months.
KLA’s stock movement on Friday reflects the updated assessment by Morgan Stanley, signaling investor recognition of the company’s potential to navigate the anticipated market changes. The firm’s commentary provides insight into the rationale behind the new price target, highlighting KLA’s strategic positioning within the semiconductor industry.
The market will continue to monitor KLA’s performance, especially in light of the forecasted industry softening. Morgan Stanley’s revised price target offers a measure of expectation for KLA’s financial trajectory as the year progresses.
In other recent news, KLA Corporation has been the subject of several analyst updates. Goldman Sachs has raised KLA’s stock price target to $864, maintaining a Buy rating. This change was influenced by KLA’s impressive financial results and positive forecasts, including a 97% return on equity and consistent dividend payments for two decades. The firm also revised its operating EPS estimates for KLA upward by 8% for 2025 and by 3% for 2026.
Meanwhile, Cantor Fitzgerald maintains a positive outlook on KLA, anticipating modest fourth-quarter earnings beats. The firm also foresees an adjustment to the 2025 earnings per share estimates for KLA. Additionally, Needham analysts upgraded KLA Corporation’s stock rating from Hold to Buy, reflecting confidence in the company’s performance and its ability to outperform competitors.
In related news, Taiwan Semiconductor Manufacturing Co. (TSMC) announced a robust capital expenditure target for 2025, exceeding analysts’ expectations. This announcement led to significant gains in shares of semiconductor equipment manufacturers, including KLA Corp. Furthermore, ASML (AS:ASML) reported record net sales of €9.3 billion for the fourth quarter of 2024, surpassing expectations. The robust earnings report led to an increase in shares of semiconductor equipment manufacturers including KLA Corporation.
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