On Dec 29, 2015, we issued an updated research report on premium technology company MKS Instruments, Inc. MKSI. The company provides instruments, subsystems and process-control solutions to measure, control, power, monitor and analyze parameters of manufacturing processes. Although MKS Instruments enjoys a high brand value, its business is currently faced with threats of external market rivalry and volatility.
Growth Drivers
Rapidly growing semiconductor business, solid performance in certain niche international markets and an efficient operating model are three major growth drivers for MKS Instruments. The company’s strategic cost-saving programs also help improve its business liquidity. Armed with healthy liquid assets, the company aims to reward its shareholders through share repurchase and dividend payout programs in the upcoming quarters.
Existing Issues
Being a multinational company, MKS Instruments is exposed to several market uncertainties. For instance, sudden unfavorable fluctuations in currency or exchange rate in the foreign markets served would hurt the company’s revenue and margins in the upcoming quarters. Moreover, the company conducts its trade in a highly competitive industry. Due to extensive rivalry, MKS Instruments is exposed to risks of market share loss, where any strategic improvement undertaken by its competitors can lower the demand for its products in the near future.
Stocks to Consider
MKS Instruments currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include EMCORE Corporation EMKR, Nikon Corporation NINOY and Tessera Technologies Inc. TSRA. While EMCORE Corporation sports a Zacks Rank #1 (Strong Buy), both Nikon Corporation and Tessera Technologies hold a Zacks Rank #2 (Buy).
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