KLAC · investment memo
Own FY2022-FY2026 (5-year) median operating margin — one complete WFE cycle, DATED. Bridge: 60.9% gross - 11.2% R&D - 8.5% SG&A - 1.5% other = 39.7% EBIT.
Four distinct questions, one field each. A price is not a thesis: the trigger below forces a re-underwrite and freezes further purchases — it is never an automatic sell.
A daily close below $127.69 triggers a mandatory re-underwrite and freezes further purchases. It is not an automatic sell unless a separate fundamental invalidation condition has been breached.
Not stated. This name has no falsifiable invalidation conditions on file, so it cannot be risk-monitored. That is a gap in the research, not a clean bill of health — recorded rather than hidden.
Named cause: the RPO run-off completing. KLA's remaining performance obligation fell from $11.40bn to $7.86bn over FY2023–FY2025 while revenue rose. The permanent-loss mechanism is not a demand shock — it is that revenue has been drawn from a backlog that is now 40% less covered, so a normal cyclical pause arrives with no cushion. Combine a return to the FY2024 trough operating margin (37.1%) with a 20% revenue decline to $10.9bn — both of which KLA has printed inside the last three years — and EBIT is ~$4.0bn, net income ~$3.4bn, EPS ~$2.62. At the p50 of its own ten-year multiple (18.6x) tha