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Wells Fargo downgraded semiconductor equipment maker Kla (NASDAQ:KLAC) to Equal Weight from Overweight.
However, the firm increased the price target on the stock to $920 from $870.
Shares of Kla dipped about 1% premarket on Tuesday.
Analysts led by Joe Quatrochi said they downgraded Kla as shares have significantly outperformed Philadelphia Semiconductor Index (SOX) (+45% year-to-date versus SOX +11%) and trade well above its median P/E (Price-to-Earnings ratio) at about 26 times.
The analysts added that they think KLA can continue to outperform Wafer Fab Equipment, or WFE, but they struggle with the drivers required to deliver further 2026 upside to their already above-Street estimates.
Quatrochi and his team also increased the price targets of several other semiconductor equipment makers.
ASML’s (NASDAQ:ASML) price target was raised to $890 from $840, while Applied Materials (NASDAQ:AMAT) was upped to $215 from $200. Lam Research’s (NASDAQ:LRCX) price target was increased to $95 from $75, and MKS’s (NASDAQ:MKSI) price target was raised to $100 from $85.