MKS Instruments Is Attractive At Current Levels, Analyst Says

  • Needham analyst James Ricchiuti maintained MKS Instruments Inc MKSI with a Buy and raised the price target from $90 to $110.
  • At its analyst day, MKS made the most compelling case for acquiring Atotech, reassuring investors that debt reduction is a priority while providing a reasonable long-term model with several potential areas of upside, characteristic of MKS's conservative approach.
  • Ricchiuti came away more constructive on the Atotech business, including gaining a better appreciation of the technology differentiation and market strength of having a specialty chemistry business, a plating equipment business, and PCB laser manufacturing technology under one roof. 
  • Investors will better appreciate the complementary nature of the Atotech business with MKS's PCB laser drilling and high-density interconnect business over the next year. 
  • The business combination provided incremental opportunities and increased content in the high-growth EV market. As a result of the acquisition, MKS increased exposure to the global automotive market at a time when the industry steadily transitioned to electrification, Ricchiuti writes.
  • Electronics & Packaging will likely be the fastest-growing segment of MKS's business.
  • Shares have underperformed the market and industry peers in 2022, which the analyst attributed to the extended time it took to close the Atotech acquisition during unprecedented interest rate hikes. 
  • The analyst maintained estimates for Q4'22 and 2023 and has introduced the 2024 forecast. MKS is attractive at current levels, Ricchiuti wrote. 
  • Price Action: MKSI shares traded lower by 2.62% at $83.12 on the last check Thursday.
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