Deutsche Bank Assumes MKS Instruments (MKSI) at Hold, 'Sensing the cyclical pressure'

Deutsche Bank analyst Ross Seymore assumes coverage on MKS Instruments (NASDAQ: MKSI) with a Hold rating and a price target of $140.00.

The analyst comments "We are assuming coverage of MKS Instruments (Ticker: MKSI) with a Hold rating and $140 P/T. In the long term, we view MKSI to be a foundational technology leader enabling the miniaturization and rising complexity in electronics at both the wafer and package level. We are constructive on the company's acquisition of Atotech (closed August 2022), as we believe Atotech's higher mix of Consumable business should lower revenue volatility especially in a low-capex environment. With this said, we expect cyclical headwinds to persist in the next several quarters as WFE spending trends remain mixed (particularly in NAND), and as Consumer Electronics end markets continue to "bounce along the bottom". These cyclical pressures are only exacerbated by the co's high leverage post-acquisition, with gross leverage still at ~5.1x exiting 1Q24 (vs. long-term target of <2.0x). Overall, we remain constructive on the company's long-term fundamental outlook, as it is a key supplier of critical components in one of the fastest growing environments in tech (85% of tools in fabs today use MKSI subsystems). However, with the shares having already risen +33% YTD and trading at ~20x our CY25E EPS, we remain on the sidelines until cyclical headwinds more fully subside."

For an analyst ratings summary and ratings history on MKS Instruments click here. For more ratings news on MKS Instruments click here.

Shares of MKS Instruments closed at $137.16 yesterday.

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