Earnings Beat: KLA Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Shareholders of KLA Corporation (NASDAQ:KLAC) will be pleased this week, given that the stock price is up 12% to US$706 following its latest third-quarter results. KLA reported US$2.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.43 beat expectations, being 5.7% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for KLA

After the latest results, the 20 analysts covering KLA are now predicting revenues of US$11.2b in 2025. If met, this would reflect a decent 16% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 39% to US$26.90. In the lead-up to this report, the analysts had been modelling revenues of US$11.0b and earnings per share (EPS) of US$26.25 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$714, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic KLA analyst has a price target of US$850 per share, while the most pessimistic values it at US$510. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that KLA's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2025 being well below the historical 18% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than KLA.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards KLA following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that KLA's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for KLA going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for KLA you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.