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KeyBanc analyst Steve Barger reiterated an Overweight rating on MKS Instruments, Inc (NYSE:MKSI) with a price target of $115.
The analyst recently hosted investor meetings with MKSI and walked away with increased conviction that the shares have a significant upside. Barger notes that MKSI has a strong position in foundational equipment supporting semiconductor and substrate manufacturing, which will benefit from cyclical recovery in consumer and commercial advanced electronics.
Additionally, MKSI's potential for secular growth in advanced packaging is unappreciated, allowing investors to buy shares. At the same time, earnings are depressed by both cyclical and balance sheet factors, both temporary.
Looking forward, Barger notes that the cycle will improve. Management will be more vocal in explaining the MKSI and Atotech Ltd value proposition and expect the company to divert all its free cash flow to deleveraging.
That should result in an EPS recovery and improving investor sentiment from balance sheet improvement, leading to a significantly higher share price in the coming years.
The analyst projects Q4 revenue of $848.6 million (consensus $847.8 million) and EPS of $0.94 (consensus $0.86).
Price Action: MKSI shares traded lower by 1.69% at $76.04 on the last check Tuesday.
Posted In: MKSI
