On Feb 28, 2014, we issued an updated research report on MKS Instruments, Inc. (MKSI). The company reported strong results for the fourth quarter of 2013. Year over year, adjusted earnings increased a whopping 320% to 42 cents, while revenues hiked 52.8% to $204.4 million.
The increase in earnings was primarily led by the construction of a semiconductor fabrication unit in China. MKS Instruments also recorded 67% year-over-year rise in gross margin for the fourth quarter. The company has been attempting to enhance shareholders’ values through dividend and share repurchases. The company currently has a $200 million share repurchase plan in action, under which shares worth $16 million have already been bought till 2013.
MKS Instruments is expected to grow through product launches. These include products launched in the semiconductor manufacturing related temperature controllers range and medical equipment and organic light-emitting diode (OLED) display manufacturing. It is also expected that in the near future, sapphire will replace the use of glass in mobile displays, which will in turn lead to the company’s growth given its multiple sapphire production tools.
The rising international sales for the company also pose certain socio-political, economic and foreign currency fluctuation risks. The longer time taken to develop a product may lead to the risk of any other company launching a similar product earlier. This may lead to additional expenditure for the company.
Key Picks from the Sector
MKS Instruments currently has a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering within this sector include Tessera Technologies Inc. (TSRA), KLA-Tencor Corporation (KLAC) and Ultra Clean Holdings Inc. (UCTT). While Tessera Technologies sports a Zacks Rank #1 (Strong Buy), KLA-Tencor and Ultra Clean Holdings hold a Zacks Rank #2 (Buy).
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