KLAC's Shares Rise 11% YTD: Buy, Sell or Hold the Stock?

KLA Corporation KLAC shares have appreciated 11% year to date (YTD), trailing the Zacks Computer and Technology sector’s return of 27.4% but outperforming the Zacks Electronics – Miscellaneous Products industry’s loss of 25.5%.However, KLAC has underperformed peers like Garmin GRMN, Brother Industries BRTHY and Flex FLEX, which have delivered YTD returns of 66.9%, 14.1% and 34.9%, respectively.KLAC’s growth has been driven by the strength of its wafer inspection segment, supported by rising demand for advanced wafer inspection applications in leading-edge technology development.KLAC is also benefiting from growing demand for advanced packaging, higher process control intensity and robust investments across multiple nodes, coupled with rising capital intensity in Foundry & Logic, making it a stock to watch for long-term investors.  KLA’s Strong Portfolio Aids its ProspectsKLAC is benefiting from a growing portfolio, particularly in advancing technology for integrated circuit (IC) substrate manufacturing.KLAC recently launched a comprehensive range of process control and process-enabling solutions for IC substrate manufacturing, designed to boost performance and profitability through advanced packaging technologies.AI adoption is driving higher-volume wafer manufacturing with more complex designs and larger chip sizes. This has resulted in higher demand for advanced packaging and is expected to contribute to KLA’s revenue growth.In the first quarter of fiscal 2025, wafer inspection revenues increased 36% year over year and 17% sequentially. It accounted for 48% of KLA’s total revenues.KLA expects its advanced packaging revenue to be over $500 million in the calendar year 2024, with continued strong growth in the calendar year 2025. This reflects the robust demand for advanced packaging solutions, highlighting KLA’s key role in meeting industry needs.Per the latest Global Market Insights report, the advanced packaging market was valued at $34.5 billion in 2023, and is expected to witness a Compound Annual Growth Rate (CAGR) of over 10% between 2024 and 2032.KLAC’s Positive Q2 GuidanceKLA’s expanding portfolio offerings will continue to help it sustain momentum in various end markets it serves.For second-quarter fiscal 2025, revenues are expected to be $2.95 billion, plus/minus $150 million. It expects non-GAAP earnings of $7.75 per share.The Zacks Consensus Estimate for revenues is pegged at $2.96 billion, indicating 18.85% growth year over year.The consensus mark for earnings is currently pegged at $7.83 per share, suggesting year-over-year growth of 27.11%.KLA Corporation Price and Consensus KLA Corporation price-consensus-chart | KLA Corporation Quote  Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Macro Uncertainties & Competition to Hurt KLAC’s ProspectsDespite its strong portfolio, KLAC faces challenges from intense competition, macroeconomic uncertainties and weakness in the PCB and Component Inspection segments.In the first-quarter fiscal 2025, PCB and Component Inspection revenues increased 1.4% year over year but were sequentially down by 1%.KLAC has also been grappling with fierce competition in the refurbished equipment market. Unlike the limited number of suppliers for new tools, the refurbished market is crowded with participants, including auctioneers, universities and online platforms.eBay has emerged as a major competitor in this space, effectively leveraging its platform to connect buyers and sellers of refurbished equipment. This competitive edge has driven eBay shares to outperform KLAC, surging by 49% in the year-to-date period.What Should Investors Do With KLAC Stock?KLAC stock is not so cheap, as its Value Score of C suggests a stretched valuation at the moment.In terms of the forward 12-month Price/Sales, KLAC is trading at 7.24x, higher than the sector’s 6.13x and the industry’s 4.22x.KLAC currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Garmin Ltd. (GRMN): Free Stock Analysis Report KLA Corporation (KLAC): Free Stock Analysis Report Flex Ltd. (FLEX): Free Stock Analysis Report Brother Industries Ltd. (BRTHY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks