On Jun 13, 2016, Zacks Investment Research downgraded MKS Instruments, Inc. (NASDAQ:MKSI) to a Zacks Rank #3 (Hold) from a Zacks Rank #1 (Strong Buy). Going by the Zacks model, companies carrying a Zacks Rank #3 have chances of performing in line with the broader market over the next quarters.
Why the Downgrade?
Given that MKS Instruments is a multinational company, it is exposed to several market-related headwinds. The company’s financials are often influenced by political, economical, social and technological changes in countries where it operates. The company generates a large portion of its revenues from foreign marketplaces. Hence, sudden unfavorable foreign currency movements could weigh on the company’s revenues and margins. In fact, appreciation of U.S. dollar has been adversely affecting the company’s international revenues in recent times.
Moreover, intense competition exposes the company to risks of market share loss. In order to avoid such issues, the company invests heavily in innovation to enhance its competency. However, in the rapidly evolving technology market, expensive inventions often become outdated within a very short span of time. Meanwhile, such costs raise the overall operating expenses of the company, thereby negatively impacting its margins.
Scope for Improvement
Nonetheless, positive industrial conditions such as improving semiconductor market demand, strong 3D NAND business and greater innovation should boost the company’s revenues and margins. Also, strategic acquisitions, lucrative innovations and tactical capital deployment programs are expected to support MKS Instruments’ business in the quarters ahead.
Notably, such optimistic aspects have triggered an upward revision in the Zacks Consensus Estimate for the stock over the last 90 days. The Zacks Consensus Estimate inched up roughly 4.2% to $2.25 for 2016 and 22.3% for 2017.
Stocks to Consider
Some better-ranked stocks in the industry include Brooks Automation, Inc. (NASDAQ:BRKS) , Cohu, Inc. (NASDAQ:COHU) and Entegris, Inc. (NASDAQ:ENTG) . All the three companies currently hold a Zacks Rank #2 (Buy).
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BROOKS AUTOMATN (BRKS): Free Stock Analysis Report
COHU INC (COHU): Free Stock Analysis Report
MKS INSTRUMENTS (MKSI): Free Stock Analysis Report
ENTEGRIS INC (ENTG): Free Stock Analysis Report
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Zacks Investment Research