KLAC
KLA Corporation
$203.36
Platform & Compounding FCF
80%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 27.0% above fair value
You pay
$203.36
Bear
$80.46
Fair
$160.12
Bull
$266.75
Bear
$80.46
-60.4%
14% stage 1 growth, 12% discount
Fair
$160.12
-21.3%
23% stage 1 growth, 12% discount
Bull
$266.75
+31.2%
30% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (23% base case)
Terminal Value % of EV
44%
Implied Market Multiple
75.4x
Market is pricing in (growth)
28.9%
vs 23.1% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $225.09 from 44 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $160.12 per share.
Warnings
Wall Street's average price target is $225.09 (from 44 analysts). Our estimate is 41% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions