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Economic Moat




KLA Overcomes COVID-19 Uncertainty With Solid Q3 Results and Q4 Outlook; No Change to $160 FVE

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

KLA reported fiscal third-quarter results in line with management’s guidance. While KLA’s customers in China returned to full production in late March, greater economic uncertainty related to COVID-19 in other regions from both a supply and demand perspective have clouded the firm’s outlook. That said, management confirmed customer demand for wafer fab equipment has been strong in the first half of 2020. KLA’s leading position in process diagnostic and control has served it well more recently, as the firm is highly leveraged to the strategic R&D investments by customers for leading-edge process technologies across logic, foundry, and memory. Ongoing technology transitions and the implementation of EUV lithography that both require advanced inspection tools from KLA give us confidence in the firm’s forward prospects amid an uncertain period. We are maintaining our fair value estimate for wide-moat KLA at $160 per share.

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Company Profile

Business Description

KLA designs and manufactures yield-management and process-monitoring 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 Mar 31, 2020
Fiscal Year End Jun 30, 2020
Stock Type Cyclical
Employees 10,020