Why KLA Corporation Stock Edged Past the Broader Market Today
Key Points
He also held fast to his equivalent of a buy recommendation.
This move was made in advance of a 10-for-1 stock split, scheduled for Friday.
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A substantial analyst price target increase was the impetus behind KLA Corporation's (NASDAQ: KLAC) market-beating Wednesday. Although the semiconductor diagnostics company's shares still landed in the red that trading session, with a 0.2% decline, they performed better than the benchmark S&P 500 index, which fell by 1.6%.
A 25% improvement
That raiser was Cantor Fitzgerald's C.J. Muse, who lifted his fair value assessment for KLA by 25% in advance of the company's 10-for-1 stock split (slated to occur this coming Friday). It's now $2,000 per share, up notably from his previous price target of $1,600. He maintained his overweight (read: buy) recommendation on the highly specialized chip stock.
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According to reports, Muse's adjustment stems from KLA management's recent raise in advanced packaging revenue guidance to $1 billion. Not surprisingly, the basis for this is higher demand coming from the immense need for smoothly functioning artificial intelligence (AI) hardware.
The analyst also waxed bullish about other corners of KLA's business, such as its more traditional DRAM and NAND segments.
Fingers in several pies
KLA is one of many niche but important companies participating in the AI revolution. This, combined with its solid and foundational business in legacy hardware, positions it well for growth in the coming quarters and years. Its stock feels like a good bet on the direction of the chip market these days.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends KLA. The Motley Fool has a disclosure policy.
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