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Here's Why You Should Hold Keysight Stock in Your Portfolio
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Keysight Technologies Inc. (KEYS - Free Report) shares have gained 4.8% since the company announced its first-quarter fiscal 2019 earnings release on Feb 21. In fact, shares of Keysight have gained 38.8%, outperforming the industry’s rally of 34.9%, on a year-to-date basis.
The company’s impressive price performance can be attributed to its laudable earnings surprise history. The company surpassed earnings estimates in three of the trailing four quarters, recording average beat of approximately 10%.
Analysts also seem to be optimistic about the company’s prospects as the stock is witnessing upward estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2019 earnings has moved north by 3.7% to $3.91 per share.
Upbeat Q1
Keysight delivered first-quarter fiscal 2019 non-GAAP earnings of 93 cents per share beating the Zacks Consensus Estimate by 14 cents. Further, the figure soared 82.4% from the year-ago quarter and came higher than management’s guided range of 76-82 cents per share.
Non-GAAP revenues surged 18% year over year to $1.009 billion surpassing the higher end of management’s guided range of $965-$985 million. Non-GAAP core revenues (excluding the impact of currency and revenues from acquisitions completed within the last 12 months) increased 20% year over year to $1.018 billion.
Meanwhile, GAAP revenues advanced 20% from the year-ago quarter to $1.006 billion. The Zacks Consensus Estimate for revenues is pegged at $978 million.
Outlook Holds Promise
For the second-quarter of fiscal 2019, the company expects GAAP revenues to be in the range of $1.057 billion to $1.077 billion. Meanwhile, non-GAAP revenues are expected in the bandof $1.06 billion to $1.08 billion.
The Zacks Consensus Estimate for revenues is pegged at $1.07 billion, indicating year-over-year growth of 8.6%.
Non-GAAP earnings per share are projected in the range of 93-99 cents per share. Notably, over the past 30 days, the Zacks Consensus Estimate for current quarter has moved upward by 4.4% to 95 cents per share, indicating year-over-year growth of 14.5%.
What’s Favoring Keysight?
KeySight is benefiting from solid demand of its electronic design and test instrumentation systems, primarily from telecom vendors.
Keysight boasts of a robust 5G portfolio. The company’s 5G product design validation solutions ranging from Layer 1 to 7 enable telecom and semiconductor companies to accelerate their 5G initiatives. Further, the company’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. The solutions offer cost-efficient test techniques with high flexibility and control capabilities, reducing timetomarket.
Additionally, collaborations with Qualcomm (QCOM - Free Report) , Xilinx and AT&T (T - Free Report) are expected to strengthen presence in the 5G network emulation market. Notably, the acquisitions of Ixia, Anite and AT4 Wireless have enriched the company’s 5G solutions portfolio.
We believe intensive infrastructure investments in 5G deployment and positive trial testing results hold promise. In fact, per ResearchAndMarkets data, global 5G market is anticipated to reach $251 billion by 2025, witnessing a CAGR of around 97% from 2020. Based on its portfolio strength, we believe that the company is well poised to gain from this robust growth prospect.
Apart from strength in 5G domain, Keysight’s efforts in other emerging growth markets like Internet of Things (IoT) and high-speed data centers, bodes well for the top line. Particularly, management’s focus on Automotive and Energy, and Aerospace and Defence domains augur well in the long haul.
In fact, growth in revenues from Aerospace, Defence and Government end-market deserves a special mention. In fiscal 2018, the non-GAAP revenues from these domains came in at $972 million, up 14.6% over fiscal 2017. Moreover, estimated higher spending on aerospace and defense globally in 2019 bodes well in this regard.
Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications, and rising adoption of driver-assistance systems globally.
Underlying Risks
The aforementioned points will enable Keysight, currently carrying Zacks Rank #3 (Hold), to remain afloat in difficult times. However, stiff competition and leveraged balance sheet remain major concerns.
Further, Keysight derives a significant proportion of its revenues from outside the United States rendering it susceptible to exchange rate volatility owing tosluggishness in China and trade-war concerns.
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Here's Why You Should Hold Keysight Stock in Your Portfolio
Keysight Technologies Inc. (KEYS - Free Report) shares have gained 4.8% since the company announced its first-quarter fiscal 2019 earnings release on Feb 21. In fact, shares of Keysight have gained 38.8%, outperforming the industry’s rally of 34.9%, on a year-to-date basis.
The company’s impressive price performance can be attributed to its laudable earnings surprise history. The company surpassed earnings estimates in three of the trailing four quarters, recording average beat of approximately 10%.
Analysts also seem to be optimistic about the company’s prospects as the stock is witnessing upward estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2019 earnings has moved north by 3.7% to $3.91 per share.
Upbeat Q1
Keysight delivered first-quarter fiscal 2019 non-GAAP earnings of 93 cents per share beating the Zacks Consensus Estimate by 14 cents. Further, the figure soared 82.4% from the year-ago quarter and came higher than management’s guided range of 76-82 cents per share.
Non-GAAP revenues surged 18% year over year to $1.009 billion surpassing the higher end of management’s guided range of $965-$985 million. Non-GAAP core revenues (excluding the impact of currency and revenues from acquisitions completed within the last 12 months) increased 20% year over year to $1.018 billion.
Meanwhile, GAAP revenues advanced 20% from the year-ago quarter to $1.006 billion. The Zacks Consensus Estimate for revenues is pegged at $978 million.
Outlook Holds Promise
For the second-quarter of fiscal 2019, the company expects GAAP revenues to be in the range of $1.057 billion to $1.077 billion. Meanwhile, non-GAAP revenues are expected in the bandof $1.06 billion to $1.08 billion.
The Zacks Consensus Estimate for revenues is pegged at $1.07 billion, indicating year-over-year growth of 8.6%.
Non-GAAP earnings per share are projected in the range of 93-99 cents per share. Notably, over the past 30 days, the Zacks Consensus Estimate for current quarter has moved upward by 4.4% to 95 cents per share, indicating year-over-year growth of 14.5%.
What’s Favoring Keysight?
KeySight is benefiting from solid demand of its electronic design and test instrumentation systems, primarily from telecom vendors.
Keysight boasts of a robust 5G portfolio. The company’s 5G product design validation solutions ranging from Layer 1 to 7 enable telecom and semiconductor companies to accelerate their 5G initiatives. Further, the company’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. The solutions offer cost-efficient test techniques with high flexibility and control capabilities, reducing timetomarket.
Additionally, collaborations with Qualcomm (QCOM - Free Report) , Xilinx and AT&T (T - Free Report) are expected to strengthen presence in the 5G network emulation market. Notably, the acquisitions of Ixia, Anite and AT4 Wireless have enriched the company’s 5G solutions portfolio.
We believe intensive infrastructure investments in 5G deployment and positive trial testing results hold promise. In fact, per ResearchAndMarkets data, global 5G market is anticipated to reach $251 billion by 2025, witnessing a CAGR of around 97% from 2020. Based on its portfolio strength, we believe that the company is well poised to gain from this robust growth prospect.
Apart from strength in 5G domain, Keysight’s efforts in other emerging growth markets like Internet of Things (IoT) and high-speed data centers, bodes well for the top line. Particularly, management’s focus on Automotive and Energy, and Aerospace and Defence domains augur well in the long haul.
In fact, growth in revenues from Aerospace, Defence and Government end-market deserves a special mention. In fiscal 2018, the non-GAAP revenues from these domains came in at $972 million, up 14.6% over fiscal 2017. Moreover, estimated higher spending on aerospace and defense globally in 2019 bodes well in this regard.
Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications, and rising adoption of driver-assistance systems globally.
Underlying Risks
The aforementioned points will enable Keysight, currently carrying Zacks Rank #3 (Hold), to remain afloat in difficult times. However, stiff competition and leveraged balance sheet remain major concerns.
Further, Keysight derives a significant proportion of its revenues from outside the United States rendering it susceptible to exchange rate volatility owing tosluggishness in China and trade-war concerns.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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