Bernstein SocGen Increases KLA Price Target to $225
Bernstein SocGen Group analyst Stacy Rasgon raised the price target on KLA Corporation (NASDAQ: KLAC) to $225 (from $197.50) while maintaining a Outperform rating.
“KLAC F4Q26 results were good ($3.658B/62.4%/$1.05 vs Street $3.600B/61.9%/$1.00) on continued strong product revenues growth (+7% QoQ and 15% YoY); Services were also solid and grew above the target model at 17% YoY.
China revenue was up ~$130M QoQ with revenue exposure rising slightly to ~26%.
F1Q27 (June-Q) guidance was a bit above ($4.000B/62.5%/$1.16 vs Street $3.943B/62.1%/$1.10), and management sees acceleration, indicating 2HCY26 up ~20% vs the first half (and thereby suggesting Dec-Q at ~$4.5B, solidly above consensus).
GMs are seen at ~62.5%, 40 bps above consensus despite continued tariffs and DRAM headwinds.
Overall, management noted further strengthening market momentum since last earnings, and now sees CY26 WFE in the low $150B range (vs $140B prior) and sees similar growth in CY27 (up mid-20’s implying ~$190B in WFE next year).
Despite all this, the shares weakened in the aftermarket (though perhaps not surprising in this earnings season) given the near-term upside into next quarter, while solid, was not huge (yet).
That being said, while the entire industry remains cleanroom-constrained in the nearterm, and KLAC themselves suffered from supply issues earlier in the year, those constraints are now easing, with clear acceleration into the end of the calendar year, and the set-up into CY27 continues to look really good to us as fab space comes online and spending in the company’s key areas (especially leading edge logic, DRAM, and packaging) climbs.
Long term secular drivers around increasing process control intensity, packaging etc remain as well, and the overall WFE demand environment seems likely to continue climbing if AI buildouts continue.
And valuations, while still a bit pricey, are a bit easier after the recent group sell-off. We understand the recent semicap angst but think the space can still be a good place to be.
Increasing ests and rolling valuation horizon forward fo FY28 (vs avg FY27/28 prior); PT to $225 (35x, unchanged, on FY28E EPS of $6.52). We rate KLAC OP.”
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