The acceleration of KLAC.US orders resonate with HBM/advanced process demand. Xiaomosang sees a target price of 1,485 US dollars

The Zhitong Finance App learned that J.P. Morgan maintains an “overweight” rating for KLAC.US (KLAC.US) and gave a target price of 1,485 US dollars. After meeting with Ke Lei's executive team, Xiaomo discovered that since the company released its financial report, the order book has continued to improve. It is expected that revenue will increase by low to medium number of units in the first half of 2026. Previously, expectations were flat to slight growth. This is mainly due to the company's recent accelerated growth in orders, particularly in the DRAM/HBM sector, and the extension of tool delivery times. However, the team still expects the growth rate in the second half of 2026 to be higher than in the first half of the year, and expects overall fab equipment (WFE) to grow throughout 2026. Komo believes the increase will be around 10%-12%.

In addition to outstanding performance in the DRAM/HBM field, Kelei has also maintained a strong spending trend in the field of advanced process foundry and logic chips, mainly due to TSMC (2nm/3nm) and the expansion of the customer base (including Intel (INTC.US), Samsung Foundry, Rapidus, etc.). Kelei is confident that its advanced packaging and HBM solutions will continue to maintain a strong growth trend in 2026. After all, in 2025, this business sector has achieved excellent growth results of over 70%.

Overall, Kelei is confident of achieving the 2026 revenue target of $14 billion and earnings per share. Currently, Xiaomo's earnings per share forecast has exceeded $39, and believes that with the strong demand for advanced process foundry, logic chips, memory, and advanced packaging, next year's results are expected to exceed expectations.

Komo believes that as the complexity of semiconductor manufacturing increases, the need to analyze defects and measurement issues in the IC manufacturing process has increased dramatically. At the same time, advanced chip design is more sensitive to minor changes in the manufacturing process, and monitoring “key” areas in chip design has become essential.

Furthermore, through the acquisition of Orbotech, Kelei achieved a diversified layout in terminal markets such as PCB, SPTS, and advanced packaging. Xiaomo believes that with the expansion of the terminal market, increased market share, technological leadership and high-quality profit margins, the company is expected to achieve a compound annual growth rate of 15% to 20% in earnings per share over the next three years, and its stock price is expected to be stronger than the average level covered by Xiaomo, thus maintaining an “gain” rating.

In terms of valuation, Xiaomo's target price of $1,485 is based on the assumption that Kelei will achieve earnings of $45 per share by the end of 2026, and that the transaction price is in the high end of the peer range (25-35 times). However, Kelei also faces some risks. Being in a highly cyclical and competitive semiconductor industry, there may be serious supply and demand fluctuations, and the timing, length, and severity of the industry cycle is difficult to predict. The downturn cycle may cause customer demand to weaken.

Furthermore, the market in this industry is changing rapidly. If Kelei does not keep up with the rapid pace of change and develop new products and technologies in a timely manner, its business may be affected. In particular, if mistakes are made in the implementation of the extreme ultraviolet lithography mask inspection strategy, it may shake its market leadership position.