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Factors Setting the Tone for Keysight's (KEYS) Q3 Earnings
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Keysight Technologies, Inc. (KEYS - Free Report) is slated to report third-quarter fiscal 2020 results on Aug 20.
The Zacks Consensus Estimate for revenues is currently pegged at $918.65 million, which indicates a decline of 15.5% from the prior-year quarter.
We note that the Zacks Consensus Estimate for earnings has been revised upward by a penny to 84 cents per share over the past 30 days, suggesting a decline of 32.8% from the year-ago reported figure.
Due to the coronavirus pandemic led business uncertainty, the company did not provide a specific quantitative guidance for third-quarter fiscal 2020. The company expects fiscal third-quarter revenues, earnings, and operating margin to be in line with or better than the fiscal second quarter.
Markedly, the company reported non-GAAP earnings of 78 cents per share and non-GAAP revenues of $895 million in second-quarter fiscal 2020. Non-GAAP operating margin was 19.4%.
Keysight has been improving production and services operations, and anticipated returning to 100% capacity by the end of the fiscal third quarter amid persistent supply chain challenges.
Notably, the company beat estimates in three of the trailing four quarters, missing the same once, the average surprise being 7.48%.
Factors Likely to Have Influenced Q3 Results
The coronavirus outbreak led global supply chain disruptions and macroeconomic challenges are likely to get reflected in Keysight’s fiscal third-quarter results.
Nevertheless, rising demand of the company’s semiconductor measurement solutions on the back of allegiance of semiconductor companies to develop chips on next-generation process technologies may have contributed to fiscal third-quarter performance.
Markedly, momentum in semiconductor domain, which contributed to revenue growth for the company’s semiconductor measurement solutions in the fiscal second quarter, is likely to have continued in the quarter under review as management noted “less supply chain disruption” across the same.
Notably, shares of the company have gained 0.3% in year to date, against the industry’s decline of 0.2%.
Solid demand for the company’s solutions in process node technology testing, considering semiconductor vertical and rise in investments in next-generation energy technologies and momentum in first-to-market solutions, might have contributed to the fiscal third-quarter performance.
However, sluggishness in aerospace end-market is likely to have impeded growth in Electronic Industrial Solutions Group (EISG) segmental revenues. Notably, the Zacks Consensus Estimate for EISG revenues is pegged at $232 million, compared with prior-quarter reported figure of $242 million.
Yet, strong order growth in the wireless ecosystem primarily fueled by advancement in 5G investment and robust adoption of Ixia’s Network Applications & Security solutions may get reflected in Communications Solutions Group (CSG) fiscal third-quarter revenues.
Nevertheless, coronavirus crisis induced softness in automotive sector is likely to have weighed on CSG revenues. Notably, the Zacks Consensus Estimate for CSG is pegged at $692 million, compared with $653 million in the fiscal second quarter.
Besides momentum in the company’s innovative PathWave Test 2020 software and latest support solutions, including Keysight Care, is expected to have aided margin expansion in the fiscal third quarter.
Moreover, incremental adoption of the company’s latest LoadCore offering, a 5G core network testing solution, that simulates complicated real-world subscriber models, is likely to get reflected in the to-be-reported quarter’s revenues.
Furthermore, growing usage of electronics-based testing equipment across medical devices and pharmaceutical markets might have benefited the performance in the quarter to be reported. Additionally, as employees are being forced to work from home due to the COVID-19 pandemic, there is an increasing demand for high-speed connectivity, which is expected to have bolstered adoption of the company’s 5G testing solutions. This might get reflected in the fiscal third-quarter results.
Key Developments in Q3
During the quarter under review, Keysight concluded the acquisition of Eggplant from The Carlyle Group with an aim to boost software test automation capabilities. Notably, the deal is worth $330 million. (Read More: Keysight Acquires Eggplant, Boosts Software Automation)
5 Stocks Set to Double
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Factors Setting the Tone for Keysight's (KEYS) Q3 Earnings
Keysight Technologies, Inc. (KEYS - Free Report) is slated to report third-quarter fiscal 2020 results on Aug 20.
The Zacks Consensus Estimate for revenues is currently pegged at $918.65 million, which indicates a decline of 15.5% from the prior-year quarter.
We note that the Zacks Consensus Estimate for earnings has been revised upward by a penny to 84 cents per share over the past 30 days, suggesting a decline of 32.8% from the year-ago reported figure.
Due to the coronavirus pandemic led business uncertainty, the company did not provide a specific quantitative guidance for third-quarter fiscal 2020. The company expects fiscal third-quarter revenues, earnings, and operating margin to be in line with or better than the fiscal second quarter.
Markedly, the company reported non-GAAP earnings of 78 cents per share and non-GAAP revenues of $895 million in second-quarter fiscal 2020. Non-GAAP operating margin was 19.4%.
Keysight has been improving production and services operations, and anticipated returning to 100% capacity by the end of the fiscal third quarter amid persistent supply chain challenges.
Keysight Technologies Inc. Price and EPS Surprise
Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote
Notably, the company beat estimates in three of the trailing four quarters, missing the same once, the average surprise being 7.48%.
Factors Likely to Have Influenced Q3 Results
The coronavirus outbreak led global supply chain disruptions and macroeconomic challenges are likely to get reflected in Keysight’s fiscal third-quarter results.
Nevertheless, rising demand of the company’s semiconductor measurement solutions on the back of allegiance of semiconductor companies to develop chips on next-generation process technologies may have contributed to fiscal third-quarter performance.
Markedly, momentum in semiconductor domain, which contributed to revenue growth for the company’s semiconductor measurement solutions in the fiscal second quarter, is likely to have continued in the quarter under review as management noted “less supply chain disruption” across the same.
Moreover, deal wins from NVIDIA (NVDA - Free Report) , QUALCOMM Incorporated (QCOM - Free Report) , Viomi Technology (VIOT - Free Report) , DEKRA, CETECOM, Audix remain noteworthy, in this regard. Robust adoption of the company’s offerings is expected to instill investor confidence in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of the company have gained 0.3% in year to date, against the industry’s decline of 0.2%.
Solid demand for the company’s solutions in process node technology testing, considering semiconductor vertical and rise in investments in next-generation energy technologies and momentum in first-to-market solutions, might have contributed to the fiscal third-quarter performance.
However, sluggishness in aerospace end-market is likely to have impeded growth in Electronic Industrial Solutions Group (EISG) segmental revenues. Notably, the Zacks Consensus Estimate for EISG revenues is pegged at $232 million, compared with prior-quarter reported figure of $242 million.
Yet, strong order growth in the wireless ecosystem primarily fueled by advancement in 5G investment and robust adoption of Ixia’s Network Applications & Security solutions may get reflected in Communications Solutions Group (CSG) fiscal third-quarter revenues.
Nevertheless, coronavirus crisis induced softness in automotive sector is likely to have weighed on CSG revenues. Notably, the Zacks Consensus Estimate for CSG is pegged at $692 million, compared with $653 million in the fiscal second quarter.
Besides momentum in the company’s innovative PathWave Test 2020 software and latest support solutions, including Keysight Care, is expected to have aided margin expansion in the fiscal third quarter.
Moreover, incremental adoption of the company’s latest LoadCore offering, a 5G core network testing solution, that simulates complicated real-world subscriber models, is likely to get reflected in the to-be-reported quarter’s revenues.
Furthermore, growing usage of electronics-based testing equipment across medical devices and pharmaceutical markets might have benefited the performance in the quarter to be reported. Additionally, as employees are being forced to work from home due to the COVID-19 pandemic, there is an increasing demand for high-speed connectivity, which is expected to have bolstered adoption of the company’s 5G testing solutions. This might get reflected in the fiscal third-quarter results.
Key Developments in Q3
During the quarter under review, Keysight concluded the acquisition of Eggplant from The Carlyle Group with an aim to boost software test automation capabilities. Notably, the deal is worth $330 million. (Read More: Keysight Acquires Eggplant, Boosts Software Automation)
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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