Monday, May 9, 2011

MKS Instruments, Inc. (NASDAQ: MKSI) Q3 2011 Price Target

Recent price: 26.75$
P/E Ratio: 9.77
3 Months Target Price: 34$

Company Description
MKS Instruments, Inc. is a provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters to improve process performance and productivity of advanced manufacturing processes. The Company also provides services relating to the maintenance and repair of its products, software maintenance, installation services and training. It groups its products into three product groups: Instruments and Control Systems; Power and Reactive Gas Products, and Vacuum Products. Its products are used in diverse markets, applications and processes. The Company’s primary served markets are manufacturers of capital equipment for semiconductor devices and for other thin film applications, including flat panel displays, light emitting diodes (LEDs), solar cells, data storage media and other advanced coatings. It also leverages its technology into other markets with advanced manufacturing applications.

Confidence Margins
Strong resistance $35.00 (+31%)
Light resistance $33.85 (+27%)
Light support $25.66 (-4%)
Strong support $23.09 (-14%)

Expect for the fact that the company announced results that were in line with what analyst's were expecting, It seems that shares of MKS Instruments are enormously undervalued at current prices. As time passes and the third quarter comes to an end, they will get back closer to their fair value, which will help current investors reap good returns.

Entry strategy
For the cautious investor:
Buy the stock for 27$ or less.

For the risk-taking trader:
The October 2011 30$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 180$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 34$, or keep it until 35$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 34$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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