Semiconductor equipment maker KLA presented a reassuring outlook at its investor day event, but analysts remain cautious amid concerns of a cyclical downturn ahead for the chip sector. KLAC stock wavered on Friday.
At its investor day conference in New York City on Thursday, KLA raised its quarterly dividend, announced a new share repurchase plan, and reaffirmed its June-quarter guidance. It also provided an upbeat business forecast that runs through 2026.
The Milpitas, Calif.-based company increased its quarterly dividend 24% to $1.30 per share. KLA also said its board authorized the repurchase of up to $6 billion in KLAC stock. The company expects about half the repurchases to occur in the next three to six months. It sees the rest coming over a period of 12 to 18 months.
The chip gear maker reiterated its revenue guidance for its fiscal fourth quarter, which ends this month.
Plus, KLA presented its growth projections for the next five years. KLA forecast 2026 earnings of $38 a share on sales of $14 billion. For the current fiscal year, analysts polled by FactSet expect KLA earnings of $20.87 a share on sales of $9.14 billion.
KLAC Stock Wavers After Investor Day
On the stock market today, KLAC stock alternated between modest gains and losses. It ended the regular session Friday up 0.5% to 311.93.
Barclays analyst Blayne Curtis said he is skeptical that KLA can meet its long-term targets. A possible downturn in the semiconductor industry stands in the way, he said.
"We appreciate that KLA is better positioned at the leading edge than others but have a hard time seeing it grow through a cyclical correction," Curtis said in a note to clients. He rates KLAC stock as equal weight, or neutral, with a price target of 365.
KeyBanc Capital Markets analyst Steve Barger maintained his overweight, or buy, rating on KLAC stock. However, he trimmed his price target to 375 from 440.
"We are taking a more conservative approach to our model and price target given mounting evidence that a consumer and industrial slowdown is coming," Barger said in a note to clients.
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