It's been a good week for MKS Instruments, Inc. (NASDAQ:MKSI) shareholders, because the company has just released its latest quarterly results, and the shares gained 5.6% to US$80.05. Revenues were US$936m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.77 were also better than expected, beating analyst predictions by 15%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from MKS Instruments' 13 analysts is for revenues of US$3.77b in 2025. This reflects a credible 3.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 4.1% to US$3.50. Before this earnings report, the analysts had been forecasting revenues of US$3.79b and earnings per share (EPS) of US$4.13 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

Check out our latest analysis for MKS Instruments

The average price target fell 6.1% to US$114, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on MKS Instruments, with the most bullish analyst valuing it at US$160 and the most bearish at US$85.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that MKS Instruments' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.1% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than MKS Instruments.

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The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MKS Instruments. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that MKS Instruments' revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of MKS Instruments' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on MKS Instruments. Long-term earnings power is much more important than next year's profits. We have forecasts for MKS Instruments going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - MKS Instruments has  4 warning signs  (and 1 which makes us a bit uncomfortable)  we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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