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As you might know, MKS Instruments, Inc. (NASDAQ:MKSI) just kicked off its latest yearly results with some very strong numbers. The company beat expectations with revenues of US$2.3b arriving 2.5% ahead of forecasts. Statutory earnings per share (EPS) were US$6.33, 4.5% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the eight analysts covering MKS Instruments are now predicting revenues of US$2.63b in 2021. If met, this would reflect a decent 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 30% to US$8.23. In the lead-up to this report, the analysts had been modelling revenues of US$2.49b and earnings per share (EPS) of US$7.42 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 14% to US$195per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on MKS Instruments, with the most bullish analyst valuing it at US$235 and the most bearish at US$150 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of MKS Instruments'historical trends, as next year's 13% revenue growth is roughly in line with 15% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.8% next year. So although MKS Instruments is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MKS Instruments' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for MKS Instruments going out to 2023, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for MKS Instruments that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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