KLA-Tencor (KLAC) PT Trimmed to $56 at Susquehanna Post Q4

Susquehanna analyst Mehdi Hosseini lowered his price target on Neutral-rated KLA-Tencor (NASDAQ: KLAC) to $56 (from $60.00) following Q4 results.

The analyst commented, "KLAC's report and commentary is pretty much in-line with our expectations and preview; Moore's Law is slowing simply because of affordability (or lack of it) and that is adversely impacting foundry/logic spending. Unfortunately, some of our peers have just caught up with the trends and that, in our view, is making the stock sentiment swing to the other extreme (vs. this time last year when KLAC could do no wrong!). As illustrated in Fig-1 inside this note, KLAC's mix of system bookings by device type illustrates the simple fact that Memory spend for KLAC in 2015 is not far from the all-time high of the 2006-2007 period when overall memory spend was peaking. So, to say KLAC is not benefiting from memory spend is not justified. However, KLAC is adversely impacted by a slow down in Moore's Law due to escalating manufacturing cost. Until EUV is commercialized to help with Moore's Law, or other means are offered to help with affordability (such as TSM agreeing to take a margin hit), we expect rather muted earning power for KLAC. We remain on the sidelines though admit sentiment has turned so negative that any marginal improvement in foundry/logic spend (driven by improving economics of Moore's Law) could make us constructive."

The firm reduced F2016 rev to $2,673M from $2,769M and non-GAAP EPS to $2.98 from $3.09.

For an analyst ratings summary and ratings history on KLA-Tencor click here. For more ratings news on KLA-Tencor click here.

Shares of KLA-Tencor closed at $52.06 yesterday.

You May Also Be Interested In

• Jefferies Downgrades LTIMindtree Ltd (LTIM:IN) to Underperform
• Amphenol (APH) PT Raised to $130 at Evercore ISI, Remains Top Pick
• Kotak Downgrades 360 ONE WAM Ltd (360ONE:IN) to Add (2)