Updated Research Report on MKS Instruments - Analyst Blog

We issued an updated research report on MKS Instruments Inc. MKSI on May 6, 2014. The company reported improved year-over-year results for the first quarter of 2014. Adjusted earnings per share increased an astounding 629% to 51 cents while revenues recorded a 46% hike to roughly $206.4 million, year over year. The enhanced results came on the back of improvement in the semiconductor and other advanced markets.

MKS Instruments has been attempting to grow inorganically over the past quarters. Aligned with this motive, the company acquired Granville-Phillips division from industry peer Brooks Automation, Inc. BRKS in Mar 2014. The acquisition is expected to be accretive to MKS Instruments' earnings from the second half of 2014. 

Shareholders are also expected to be benefited in the long run due to the company's efforts in enhancing returns. MKS Instruments has been paying regular dividends to its shareholders. Recently, it announced a quarterly dividend increase to 165 cents from 160 cents per share.

Moreover, the company has a strong customer base whose association over time has proved advantageous. With continued improvement in the semiconductor market, soaring contribution from these customers is also expected to prevail.    

However, MKS Instruments' overseas operations expose it to foreign currency fluctuation risks. Also, in the semiconductor-allied industry, a substantial portion of the revenues is generated through company-owned patents. Thus, possible non-renewal of these patents might be a major blow for the company.

With a market capitalization of $1.5 billion, MKS Instruments currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the industry are Kulicke and Soffa Industries, Inc. KLIC and Siliconware Precision Industries Co. Ltd. SPIL. While Kulicke and Soffa Industries sports a Zacks Rank #1 (Strong Buy), Siliconware Precision Industries holds a Zacks Rank #2 (Buy).