MKSI - MKS Instruments rises as KeyBanc upgrades citing 'strong competitive position'

MKS Instruments ( NASDAQ: MKSI ) shares rose in premarket trading on Tuesday as investment firm KeyBanc Capital Markets upgraded the semiconductor manufacturing company, citing its "strong competitive advantage."

Analyst Steve Barger raised his rating on MKS Instruments ( MKSI ) shares to overweight from sector-weight, along with a $100 price target, noting that after attending the company's recent analyst day, there is a better appreciation for its 2021 acquisition of Atotech Limited.

"We expect some investors may balk at current cyclical uncertainties and MKS's balance sheet leverage, but at the current price we think shares already reflect many of those risks," Barger wrote in a note to clients.

The analyst added that once the semiconductor industry gets through its current down cycle, which is likely to continue for at least part of 2023, there is likely to be a resumption of long-term trends. These should aid MKS Instruments ( MKSI ) as advanced packaging needs and continued fab buildout continue to drive growth for the company.

"While we are not willing to assume a linear path or even the same timeline assumed in MKS's 2027 targets of [more than] $5.6B in revenue and [more than] $13 in EPS, we do expect solid revenue and earnings growth will lead to multiple expansion," Barger added.

Barger also boosted his earnings target for 2024 to $6.79 per share, up from a previous estimate of $6.40 per share.

In November, MKS Instruments ( MKSI ) reported better-than-expected third-quarter results, but issued a weak forecast for the fourth-quarter, citing business levels, regulatory environment, and certain supply chain constraints .

Analysts are all over the map on MKS Instruments ( MKSI ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates MKSI a SELL .

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