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KLA Expects Greater Than 30% Wafer Fab Equipment Growth in Calendar 2021; Raising FVE to $360

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

KLA reported fiscal fourth-quarter results at the high end of management’s guidance, led by continued strength in the foundry and logic segments and improved memory spending. Consistent with KLA’s peers and our internal estimates, management now expects the wafer fab equipment, or WFE, market to be up at least 30% in calendar 2021 (up from mid-20s). KLA’s leading position in process diagnostic and control has served it well, as the firm is highly leveraged to the strategic R&D investments by customers for leading-edge process technologies across all chip types. We are raising our fair value estimate for wide-moat KLA to $360 per share from $315 as we incorporate a stronger growth outlook for 2021 and beyond. We view shares as modestly undervalued.

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Company Profile

Business Description

KLA designs and manufactures yield-management and process-monitoring diagnostic and control systems for the semiconductor industry. The systems are used to analyze the manufacturing process at various steps in a product's development. The firm's laser-scanning products are used for wafer qualification, process monitoring, and equipment monitoring. KLA also provides inspection tools and systems for optical metrology and e-beam metrology.

One Technology Drive
Milpitas, CA, 95035
T +1 408 875-3000
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Jun 30, 2021
Fiscal Year End Jun 30, 2022
Stock Type Cyclical
Employees 11,550