Sunday, June 23, 2024
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KLA Corporation (KLAC) shareholders have enjoyed a stellar week, with the stock price jumping 13% to US$714 following the release of their third-quarter results.

The company reported US$2.4 billion in revenue, largely in line with analyst forecasts. However, statutory earnings per share (EPS) of US$4.43 surpassed expectations, exceeding analyst estimates by 5.7%.

Analysts typically adjust their forecasts after each earnings report. This recent performance has prompted analysts to revise their outlook for KLA. The current consensus from 22 analysts predicts revenue of US$11.1 billion in 2025, reflecting a robust 16% increase compared to the past year. Per-share earnings are also expected to surge 39% to US$27.03, indicating a more bullish outlook compared to the pre-earnings forecasts of US$11.0 billion in revenue and US$26.25 in EPS for 2025.

Despite the improved earnings outlook, the consensus price target remains unchanged at US$727. This suggests that the analysts believe the positive developments won’t significantly impact long-term shareholder value creation.

It’s important to note that the consensus price target is an average. Individual analyst targets range from US$530 (most pessimistic) to US$850 (most optimistic). While these variations highlight some analyst disagreement, the range doesn’t suggest extreme forecasts of either breakout success or utter failure.

Looking ahead, analysts anticipate a slowdown in KLA’s revenue growth. Annualized growth is projected to reach 13% by the end of 2025, compared to the historical 18% growth rate over the past five years. Furthermore, the industry as a whole is expected to witness a faster growth rate of 17% annually. This suggests that KLA might experience slower growth than its industry peers.

Overall, KLA’s strong earnings report has fueled investor confidence and prompted analysts to revise their estimates upwards. While the company is expected to maintain a positive growth trajectory, it might lag behind the broader industry in terms of growth rate.

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