At its analyst day, MKS made the most compelling case for acquiring Atotech, reassuring investors that debt reduction is a priority while providing a reasonable long-term model with several potential areas of upside, characteristic of MKS’s conservative approach.
Ricchiuti came away more constructive on the Atotech business, including gaining a better appreciation of the technology differentiation and market strength of having a specialty chemistry business, a plating equipment business, and PCB laser manufacturing technology under one roof.
Investors will better appreciate the complementary nature of the Atotech business with MKS’s PCB laser drilling and high-density interconnect business over the next year.
The business combination provided incremental opportunities and increased content in the high-growth EV market. As a result of the acquisition, MKS increased exposure to the global automotive market at a time when the industry steadily transitioned to electrification, Ricchiuti writes.
Electronics & Packaging will likely be the fastest-growing segment of MKS’s business.
Shares have underperformed the market and industry peers in 2022, which the analyst attributed to the extended time it took to close the Atotech acquisition during unprecedented interest rate hikes.
The analyst maintained estimates for Q4’22 and 2023 and has introduced the 2024 forecast. MKS is attractive at current levels, Ricchiuti wrote.
Price Action: MKSI shares traded lower by 2.62% at $83.12 on the last check Thursday.
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