KLA Corp. downgraded to Equal Weight at Morgan Stanley on valuation

As previously reported, Morgan Stanley analyst Shane Brett downgraded KLA Corp. (KLAC) to Equal Weight from Overweight with a price target of $1,093, up from $928. The firm revised up its 2026 wafer fab equipment sales forecast from up 5% year-over-year to up 10%, with the revision “almost entirely” in memory, where its base case is now close to its prior bull case, the analyst tells investors. The firm, which revised up calendar year 2026 EPS estimates for Applied Materials (AMAT), KLA Corp. and Lam Research (LRCX) by 5%-9% to reflect the firm’s new wafer fab equipment forecast, notes that its estimates now are Street high for all companies. KLA’s operations have strengthened through the year as the company’s growth drivers have “gone from strength to strength,” but the firm sees relative outperformance as “hard to call” at a 30% valuation premium versus Applied and Lam, the analyst says.