MKS Instruments Posts Better-Than-Expected Q2 Results

MKS Instruments, Inc. (MKSI), a provider of instruments, subsystems, and process control solutions, delivered robust second-quarter results despite supply constraints for its components. Shares slipped 4% after-hours after closing the day up 2.2% at $160.10 on July 28. (See MKS Instruments stock charts on TipRanks)

The company reported earnings of $3.02 per share, up 86.4% year-over-year, and beat analysts’ estimates of $2.95 per share.

Revenue increased 38% compared to the prior-year period to $750 million and surpassed the Street’s estimate of $742.24 million.

Revenue was boosted by continued momentum in both the Semiconductor Market and Advanced Markets, which witnessed year-over-year growth of 34% and 43%, respectively.

John T.C. Lee, President and CEO, said, “With the closing of the acquisition of Photon Control Inc. and the announcement of our agreement to acquire Atotech Limited, MKS is well-positioned to lead the way in addressing the challenges of miniaturization and complexity in semiconductor and advanced electronics manufacturing, and I am very excited about the opportunities that lie ahead.”

For the third quarter, the company projects revenue of $720 million (+/-$30 million) and earnings of $2.74 per share (+/-$0.26).

Consensus estimates for revenue and earnings are pegged at $732.5 million and $2.73 per share, respectively.

Following the results, Rosenblatt Securities analyst Scott Graham reiterated a Buy rating on the stock with a price target of $285, implying 78% upside potential to current levels.

Graham said, “We view this as a good earnings report, reflective of robust demand in both Semi and Advanced Markets and good execution in driving earnings and FCFs.”

The analyst’s initial view of the earnings is positive with results beating both top-line and bottom-line expectations. However, he said, “3Q guidance of sales and earnings do not reflect the same beat and raise we’ve seen with MKSI over the last year-plus owing to bottlenecks impacting MKSI’s chain. But this also extends the cycle, in our view, as demand remains robust.”

With 4 unanimous Buys, the stock has a Strong Buy consensus rating. The average MKS Instruments price target of $245 implies 53% upside potential to current levels. Shares have gained 28.2% over the past year.