Morgan Stanley Downgrades KLA Corp (KLAC) But Lifts Price Target on Earnings Growth Prospects

KLA Corp (NASDAQ:KLAC) is one of the high-growth semiconductor stocks that are profitable in 2025. On September 22, Morgan Stanley downgraded the stock to ‘Equal-weight’ from Overweight and increased the price target to $1,093 from $928.

The downgrade comes amid concerns that valuation remains stretched, with the stock trading at a 30% valuation premium. Despite the downgrade, the research firm has reiterated the company’s strong fundamentals, which are supported by growing demand from TSMC, DRAM, and advanced packaging.

Consequently, the investment bank has raised the company’s EPS estimate for 2026 to $39.03 from $37.11. Morgan Stanley remains confident about the company’s prospects, as wafer fab equipment revenue is expected to grow by 10% to $128 billion, up from the previous 5% growth forecast.

KLA Corp (NASDAQ:KLAC) develops and manufactures equipment, software, and services for process control and yield management in the semiconductor and electronics industries, focusing on advanced inspection, metrology, and other solutions to find defects, monitor manufacturing processes, and improve the quality and profitability of integrated circuits (ICs), wafers, and reticles.

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Disclosure: None. This article is originally published at Insider Monkey.