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Chip Gear Maker KLA Tops Quarterly Goals, Guides Higher

Semiconductor equipment maker KLA (KLAC) late Thursday beat Wall Street’s targets for its fiscal third quarter and pointed higher for the current period. But KLAC stock dropped in extended trading. KLA is one of several chip gear stocks to post quarterly results this week.




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The Milpitas, Calif.-based company earned an adjusted $3.85 a share on sales of $1.8 billion in the quarter ended March 31. Analysts expected KLA earnings of $3.62 a share on sales of $1.75 billion. On a year-over-year basis, KLA earnings rose 56% while sales climbed 27%.

For the current quarter, KLA expects to earn an adjusted $3.91 a share on sales of $1.86 billion. That’s based on the midpoint of its outlook. Wall Street had predicted KLA earnings of $3.66 a share on sales of $1.77 billion in the June quarter. In year-earlier period, KLA earnings were $2.73 a share on sales of $1.46 billion.

“KLA’s March-quarter results demonstrate strong momentum in our business,” Chief Executive Rick Wallace said in a news release. “We have seen a sharp increase in business levels in each of our major end markets, driven by secular demand trends across a broad range of semiconductor markets and applications.”

KLAC Stock Dips In Late Trades

In after-hours trading on the stock market today, KLAC stock sank 1.6%, near 321. During the regular session Thursday, KLAC stock rose 0.5% to 326.36.

On April 1, KLAC stock broke out of a cup base at a buy point of 342.31, according to IBD MarketSmith charts. It notched a record high of 359.69 on April 5. But the next week it fell out of the buy zone. And on April 19, KLAC stock triggered a stop-loss sell rule, based on IBD trading principles.

Semiconductor Equipment Stocks Release Earnings

Earlier this week, industry peers Teradyne (TER) and Ultra Clean Holdings (UCTT) each delivered beat-and-raise reports.

Late Tuesday, Teradyne said it earned an adjusted $1.11 a share on sales of $782 million in the first quarter. Its earnings and sales both rose 11% year over year.

For the second quarter, the North Reading, Mass.-based company expects to earn an adjusted $1.73 a share on sales of $1.05 billion, based on the midpoint of its outlook. That would translate to year-over-year growth of 30% in earnings and 25% in sales. Teradyne makes semiconductor and wireless test equipment as well as industrial automation gear.

Late Wednesday, Ultra Clean said it earned an adjusted 92 cents a share, up 77% year over year, on sales of $417.6 million, up 30%, in the March quarter.

For the current quarter, Ultra Clean guided to adjusted earnings of 97 cents a share on sales of $505 million. That would equate to year-over-year growth of 29% in earnings and 46% in sales. Ultra Clean supplies ultrahigh purity cleaning equipment and critical subsystems for the semiconductor industry.

Some Chip Gear Stocks Disappoint

Meanwhile, semiconductor equipment stocks Cohu (COHU), Entegris (ENTG) and FormFactor (FORM) disappointed with their quarterly reports this week.

KLAC stock ranks No. 14 out of 34 semiconductor equipment stocks, according to IBD Stock Checkup. It has an IBD Composite Rating of 96 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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