Key insights
- Morgan Stanley raised its price target for MKS Instruments (MKSI) due to an improved outlook for NAND wafer fabrication equipment spending. The firm projects significant growth in NAND-related revenue for MKS, driven by increased clean room capacity and EUV supply dynamics. This bullish forecast, coupled with upward earnings revisions, suggests positive momentum for MKSI and potentially the broader semiconductor equipment sector. However, consumer electronics weakness and DRAM/logic exposure pose risks.
Investing.com - Morgan Stanley raised its price target on MKS Instruments (NASDAQ:MKSI) shares to $374 from $354 while maintaining an Overweight rating on the stock.
The firm increased its 2027 NAND wafer fabrication equipment forecast to $24.0 billion from $19.7 billion, citing incremental memory clean room capacity, tightening EUV supply shifting allocation toward NAND, and long-term agreements necessitating spending. Morgan Stanley now sees NAND as the highest year-over-year growth segment across semiconductor process equipment end-markets in 2027, growing 52% versus overall WFE growth of 28%.
Morgan Stanley raised its fiscal 2027 MKS revenue forecast to $5.82 billion from $5.63 billion and its earnings per share estimate to $17.01 from $16.07. The firm’s EPS forecast now stands 16% above consensus estimates. The firm’s semiconductor growth forecast for MKS in fiscal 2026 and 2027 moved to 34% and 32% from 33% and 26%, respectively.The bullish outlook aligns with broader semiconductor equipment sector momentum, as peers like Applied Materials have seen 25 analysts revise earnings upwards. For deeper insights into MKS Instruments’ valuation and growth prospects, InvestingPro offers comprehensive analysis including Fair Value estimates and expert ProTips.
MKS derives primary NAND exposure through its market share in RF power, which is used in Lam Research’s advanced etch tools for high-aspect-ratio NAND etching. The firm estimates MKS’s NAND revenue declined to $134 million, or 9% of semiconductor revenue, in 2024 from $754 million, or 37% of semiconductor revenue, in 2022, and models a recovery to $644 million in 2026.
Morgan Stanley maintained its target multiple of 22 times earnings, representing a 30% discount to front-end peers. The firm identified consumer electronics weakness and DRAM and logic exposure as potential risks to its outlook.
In other recent news, Applied Materials has reported significant developments that have caught the attention of several analyst firms. The company announced April quarter results with revenue and earnings per share totaling $16.9 billion and $6.22, surpassing consensus estimates of $15.8 billion and $5.54. Needham highlighted the company’s first-quarter fiscal 2026 revenue of $7.91 billion, marking a 13% sequential increase, and noted non-GAAP gross margins reaching 50%. The company also provided guidance for the July quarter, projecting a 13% increase in revenue, which is 10% ahead of consensus expectations.
In response to these strong financial performances and future outlooks, several firms have adjusted their price targets for Applied Materials. TD Cowen increased its price target to $525, citing robust demand visibility in semiconductor capital equipment. Cantor Fitzgerald raised its price target to $575, emphasizing the company’s strong quarterly results and guidance. Needham also raised its target to $530, maintaining a Buy rating. Wolfe Research adjusted its target to $550, noting the company’s strong guidance.
Additionally, Lynx Equity maintained its $540 price target, suggesting that Applied Materials offers an opportunity to engage in the multi-year AI investment cycle. These developments reflect a positive sentiment from analysts regarding Applied Materials’ market position and future growth prospects.
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