Morgan Stanley Upgrades KLA to Overweight

Morgan Stanley analyst Shane Brett upgraded KLA Corporation (NASDAQ: KLAC) from Equalweight to Overweight with a price target of $1,694.00 (from $1,214.00).

“Revise up 26/27 EPS estimates by 7%/14%, upgrade to OW. We model 2026–27 y/ y revenue growth of 16%/19%, versus the Street at 10%/9%, and our CY2027 EPS forecast is now 16% above consensus.

We see 2 strong years of EPS acceleration (17%/24%).

Our estimate revisions are skewed toward foundry logic, where we raise 2026/27 estimates by 10%/18%, compared with memory, where our estimates increase by 4%/10%.

We also raise our target multiple to 33x from 27x, which, applied to our new CY27 EPS estimate of $51.41, results in a price target of $1,697 (18% upside).

Multiple reflects a 15% premium to LAM/AMAT, a slight premium to historical average of 10% to reflect structural process control intensity growth.”

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