MKS Instruments, Inc.
MKSI Details
MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity. It also provides services relating to the maintenance and repair of its products, installation services and training.
Why should Investors Sell?
- More Leveraged Company: The company’s debt to equity ratio is 0.30x which is quite higher than the industry median of 0.23x. Further long-term debt to total capital is 22.8% in Q3FY21 which is higher than the industry median of 13.4% making the company more leveraged.
- Risks pertaining to Acquisition of Atoech: The company is exposed risks to complete its acquisition of Atotech, which will help the company to repay its debt and increase cash flow. The company does not have experience which may put it to significant additional liabilities, the risk of litigation relating to the Atotech acquisition, the risk that disruption from the Atotech acquisition materially and adversely affects the respective businesses and operations of MKS and Atotech.
- Stable Revenue and Decreased Gross Margins: Net revenue of the company in Q3FY21 is USD 742 million, a sequential decrease of 1% from USD 750 million in Q2FY21, and a year-over-year increase of 26% from USD 590 million in the Q3FY20. The gross margin of the company in Q3FY21 is 47% which is lower than Industry median of 53.3%.
Valuation Methodology: Enterprise Value/EBITDA Multiple Based Relative Valuation
Source: Analysis by Kalkine Group
MKSI Daily Technical Chart as on date January 14, 2022 (Source: REFINITIV)
Stock Recommendation:
MKSI’s stock price has surged 2.47% in the past nine months and is currently leaning towards the higher-band of the 52-week range of USD 199.44 to USD 138.70. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 62.208. We have valued the stock using the EV/EBITDA multiple-based relative valuation methodology and arrived at a target price of USD 153.98.
Considering the company's growth prospects, ongoing disruption in acquisition, current valuation, and technical indicators, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 180.69, up 3.91%, as of January 14, 2022.
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.