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BofA on KLA Corp: Supply-Not-Demand Constraint, Buy Into Acceleration — PO $260

Posted on by Eben@CANSLIM Research
Eben@CANSLIM Research's avatarEben@CANSLIM Research

BofA Securities has reiterated its Buy rating on KLA Corporation (KLAC) while cutting its price objective to $260 from $317, arguing the process-control specialist is constrained by supply rather than demand and should accelerate as capacity comes online. The broker raised its CY26 and CY27 EPS estimates by 7% and 14% to $4.54 and $5.90 respectively, and lifted its CY26 wafer fab equipment (WFE) outlook to low-$150bn from $140bn-plus. The lower price objective reflects sector multiple compression, not deteriorating fundamentals.

Key Takeaways

  • BofA Securities analyst Vivek Arya reiterated a Buy rating on KLA Corporation (KLAC) on 29 July 2026 but lowered the price objective to $260 from $317, now based on 36x CY28E PE versus 53x previously.
  • KLAC’s June-quarter revenue and EPS came in 1% and 5% above consensus, while September-quarter guidance was 1% and 6% ahead of the Street.
  • BofA raised its CY26/CY27 EPS estimates for KLAC by 7%/14% to $4.54/$5.90, alongside sales increases of 4% and 9% for the same periods.
  • KLAC’s semiconductor process control segment is exiting CY26 growing in the low-40s percentage range with backlog up 59% year-on-year, which BofA reads as evidence of accelerating above-industry growth.
  • Advanced packaging process control revenue is expected to reach roughly $1.1bn in CY26, up 70% year-on-year, with free cash flow margins approaching 40% and about $3.3bn returned to shareholders over the past 12 months.

Lead Analysis: What BofA’s KLA Note Says

In a report titled “KLA Corporation — Supply constrained, not demand constrained; expect acceleration ahead,” BofA Securities’ Vivek Arya, Duksan Jang, Michael Mani and Liam Pharr argue that KLA Corporation (KLAC) is being held back by supply rather than a lack of customer demand. The note, dated 29 July 2026, reiterates a Buy rating with a price objective of $260, down from $317, against a share price of $190.80 at the time of writing.

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