KLA-Tencor upgraded to Neutral on improved WFE spending view at Goldman Sachs
Goldman Sachs analyst Toshiya Hari upgraded KLA-Tencor (KLAC) to Neutral from Sell, citing his belief that meaningful capex cuts and production adjustments from memory chip makers, coupled with recent supply-side disruptions, will result in an improvement in memory supply/demand sooner than previously expected and drive higher levels of Wafer Fab Equipment spending in 2020. However, he still sees KLA as a relative underperformer compared to peers Applied Materials (AMAT) and Lam Research (LRCX), which he upgraded to Conviction Buy and Buy, respectively. The analyst, who now forecasts the WFE market to grow 7% -year-over-year in 2020 compared to his prior assumption of it being flat, still noted he sees downside to Street estimates for the second half and for calendar year 2020. Hari increased his price target on KLA shares to $130 from $104.