MKS (MKSI) remains well positioned for a strong earnings recovery into 2026 and 2027 despite a Q4 report that fell short of "sky high expectation," Morgan Stanley said in a report Wednesday.

Although MKS' Q1 revenue guidance of about $1.04 billion slightly missed the $1.05 billion consensus estimate, the investment bank said the long-term thesis remains intact. "Strong" E&P tool bookings, improving gross margin trends and expected semiconductor outperformance in a Wafer Fabrication Equipment recovery support a favorable 2026 to 2027 setup, the report said.

The investment bank said the June quarter could prove significant, forecasting 6.7% sequential revenue growth, up from a prior 3.5% estimate. Semiconductor revenue has exceeded the midpoint of guidance by an average of 4% "over the past five quarters," aided by customer pull-ins late in the quarter, a trend expected to continue, according to the report.

Morgan Stanley has raised fiscal-year 2026 revenue and EPS estimates to $4.56 billion and $10.44, respectively, and fiscal-year 2027 projections to $5.28 billion and $14.27, citing stronger growth assumptions in both semi and electronics & packaging markets.

Morgan Stanley has an overweight rating on MKS and raised its price target to $300 from $258.

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