Traders Purchase High Volume of Put Options on KLA (NASDAQ:KLAC)

Key Points

• Traders purchased a notably high volume of puts — 4,175 put options, a 92% increase over the average — indicating elevated bearish bets or hedging activity.
• KLAC shares fell $102.69 to $1,693.22 on the day with 503,745 shares traded, below its average volume, suggesting the put activity coincided with downward price pressure.
• KLA beat quarterly EPS estimates ($8.85 vs. $8.75), announced a $7.00 billion share buyback (up to ~3.7% of shares) and pays a $1.90 quarterly dividend, while analysts maintain a "Moderate Buy" consensus.

KLA Corporation (NASDAQ:KLAC - Get Free Report) was the recipient of some unusual options trading activity on Wednesday. Traders purchased 4,175 put options on the company. This is an increase of 92% compared to the average daily volume of 2,179 put options.

KLA Price Performance

KLAC stock traded down $102.69 on Wednesday, hitting $1,693.22. 503,745 shares of the company's stock traded hands, compared to its average volume of 1,078,619. KLA has a 1-year low of $607.70 and a 1-year high of $1,798.00. The stock has a market cap of $221.95 billion, a price-to-earnings ratio of 49.44, a P/E/G ratio of 3.34 and a beta of 1.44. The stock has a fifty day moving average of $1,496.93 and a 200-day moving average of $1,334.36. The company has a current ratio of 2.83, a quick ratio of 2.00 and a debt-to-equity ratio of 1.08.

KLA (NASDAQ:KLAC - Get Free Report) last released its earnings results on Thursday, January 29th. The semiconductor company reported $8.85 EPS for the quarter, beating the consensus estimate of $8.75 by $0.10. KLA had a net margin of 35.76% and a return on equity of 98.18%. The business had revenue of $3.30 billion during the quarter, compared to analyst estimates of $3.25 billion. During the same period in the prior year, the business earned $8.20 earnings per share. The business's quarterly revenue was up 7.1% on a year-over-year basis. On average, analysts forecast that KLA will post 31.59 EPS for the current fiscal year.

KLA announced that its board has initiated a share buyback plan on Thursday, March 12th that permits the company to buyback $7.00 billion in outstanding shares. This buyback authorization permits the semiconductor company to reacquire up to 3.7% of its stock through open market purchases. Stock buyback plans are usually a sign that the company's board of directors believes its shares are undervalued.

KLA Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Tuesday, March 3rd. Stockholders of record on Tuesday, February 17th were issued a dividend of $1.90 per share. The ex-dividend date was Tuesday, February 17th. This represents a $7.60 dividend on an annualized basis and a dividend yield of 0.4%. KLA's payout ratio is currently 22.11%.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in KLAC. Close Asset Management Ltd purchased a new position in KLA during the third quarter valued at approximately $133,209,000. PFA Pension Forsikringsaktieselskab bought a new stake in KLA in the fourth quarter worth approximately $119,618,000. BNP PARIBAS ASSET MANAGEMENT Holding S.A. grew its position in KLA by 69.1% in the third quarter. BNP PARIBAS ASSET MANAGEMENT Holding S.A. now owns 87,547 shares of the semiconductor company's stock worth $94,422,000 after acquiring an additional 35,770 shares in the last quarter. Pinebridge Investments LLC bought a new stake in KLA in the fourth quarter worth approximately $32,812,000. Finally, SG Americas Securities LLC grew its position in KLA by 418.1% in the third quarter. SG Americas Securities LLC now owns 29,227 shares of the semiconductor company's stock worth $31,524,000 after acquiring an additional 23,586 shares in the last quarter. 86.65% of the stock is owned by hedge funds and other institutional investors.

Wall Street Analysts Forecast Growth

A number of research analysts have issued reports on the stock. Dbs Bank raised shares of KLA from a "hold" rating to a "moderate buy" rating in a research note on Monday, March 9th. Argus boosted their price target on shares of KLA from $1,400.00 to $1,750.00 and gave the stock a "buy" rating in a research report on Wednesday, February 4th. Jefferies Financial Group dropped their price target on shares of KLA from $1,850.00 to $1,700.00 and set a "buy" rating on the stock in a research report on Friday, March 13th. Needham & Company LLC restated a "buy" rating and set a $1,800.00 price target on shares of KLA in a research report on Monday, March 16th. Finally, Barclays boosted their price target on shares of KLA from $1,595.00 to $1,700.00 and gave the stock an "overweight" rating in a research report on Friday, January 30th. Twenty investment analysts have rated the stock with a Buy rating and eleven have assigned a Hold rating to the company. According to MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and a consensus price target of $1,614.79.

KLA Company Profile

KLA is a provider of process control and yield management solutions for the semiconductor and related microelectronics industries. The company designs and manufactures equipment, software and services used by chipmakers to analyze and control manufacturing processes, detect defects, measure critical dimensions and improve yield across wafer fabrication, photomask and packaging operations. KLA's offerings are aimed at enabling production of advanced logic, memory, and specialty devices at progressively smaller technology nodes and more complex package structures.

Its product portfolio includes optical and e-beam inspection systems, metrology tools for critical dimension and film measurement, mask and reticle inspection platforms, as well as enterprise software and data analytics that aggregate process data and drive automated process control.

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