Fitch lifts KLA-Tenor view to positive

Fitch Ratings said it affirmed KLA-Tenor Corp.'s ratings at BBB+ and revised the outlook to positive from stable.

The outlook reflects an expectation for strong operating performance despite a weak near-term outlook for electronics manufacturing, Fitch said.

The agency said it expects high single-digit revenue growth through the cycle and strong relative profitability, including annual free cash flow approaching $1 billion, Fitch said.

The recently closed merger with Orbotech Ltd. expands KLA's addressable markets and adds leading capabilities in printed circuit boards, flat panel displays and specialty semiconductors, the agency said, as well as repair and test and a meaningful service business.

That is expected to accelerate growth, Fitch said.

The agency also said it expects annual free cash flow will average $750 million to $1 billion of over the intermediate term, up from prior expectations of roughly $500 million due to revenue growth outperformance and the addition of Orbotech.

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