MKS Instruments' Analyst Day Holds Key To Gauge Growth Prospects, Says Analyst

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  • Needham analyst James Ricchiuti reiterated a Buy rating on the shares of MKS Instruments Inc MKSI with a price target of $90.00.
  • MKS is slated to host its first analyst day in two years in Boston on Dec 14, 2022.
  • The analyst expects the company to offer a broader view of the opportunities that arise out of the combination of Atotech's specialty chemical and plating equipment business with the legacy MKS PCB laser drilling business.
  • The analyst does not believe investors are assigning much value to the combined company’s capabilities in advanced PCB production and package substrates, but believe those represent high-growth opportunities for MKS over the next several years.
  • Ricchiuti thinks MKS’ downward revision for the semiconductor business has set the bar low enough for the company to potentially over-deliver. 
  • The analyst expects investors will also increasingly focus on the improved prospects for the Semiconductor business in 2024, given the potential that 2023 will represent the trough in the cycle in this part of MKS’s business.
  • MKS has a long history of funding M&A with debt and then de-levering in a relatively short period of time. 
  • The sharp increase in interest rates from the time the Atotech acquisition was announced in July 2021 to its close in mid-August 2022 has been a significant headwind out of the gate, though the analyst expects MKS to highlight the cash generation potential of the combined company and reaffirm its emphasis on de-levering.
  • Price Action: MKSI shares are trading higher by 1.54% at $83.27 on the last check Monday.
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