Cantor Fitzgerald Raises KLA Price Target to $1,850
Cantor Fitzgerald analyst C.J.
Muse raised the price target on KLA Corporation (NASDAQ: KLAC) to $1,850.00 while maintaining an Overweight rating.
“KLA offered a much more conservative outlook for WFE vs. peer Lam Research, sending shares lower overnight.
More specifically, KLA guided WFE to ~$123B vs. LRCX’s $135B.
Our sense is this is partially due to timing of process control buys, greater ties to litho investments, and significantly less exposure to NAND (more levered to greenfield than layer adds) and all else equal, lower share of wallet in DRAM.
We also believe KLA is setting the bar conservatively, which leaves room for potential raises throughout the year, as well as, quite frankly, Lam likely being the best large-cap SPE share gainer once again in CY26.
Our sense is most other SPE companies will guide to $125B initially and then grow it higher through the year.
We would also note GM guide modestly worse (guided 62% vs our previously modeled 62.3% for CY26, fueled by higher DRAM pricing), though we believe 63%+ is doable into CY27.
We understand investor concerns here, particularly end market growth, but we do think KLA will take WFE higher throughout the year, enabling EPS estimates to move higher as well.
Bigger picture, there is no change to our thesis that we are in a multi-year upcycle that will deliver material growth to WFE into CY26, CY27, and CY28.
We note KLA lead times are extending (now 9-12mos vs. prior 7-9mos) and visibility extends nicely into 2027 with mgmt discussing the “setup for 2027…(as)…pretty remarkable.” To wit, any order placed today or beyond, likely cannot be satisfied by KLA until CY27.
We raise our EPS estimates to $41/$55 for CY26/27 (cons $40.59/$48.86) with stretch goal of $60-65 still intact for CY27.
We are raising our price target to $1,850 – reflecting 28-31x our stretch goal EPS estimate for CY27.
With still ~20% upside (based on after-hour pricing), we reiterate our Overweight rating, and KLA remains a TOP PICK; we would be adding on likely weakness Friday.
Next catalyst – KLA will be hosting its Analyst Day on March 12 (we will also be meeting with mgmt. on 2/24).”
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