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Factors to Note Ahead of Keysight's (KEYS) Q3 Earnings Release

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Keysight Technologies, Inc. (KEYS - Free Report) is slated to report third-quarter fiscal 2021 results on Aug 18.

For fiscal third quarter, Keysight anticipates revenues in the range of $1.205-$1.225 billion, suggesting year-over-year growth in the range of 19-21%. The Zacks Consensus Estimate for the same is currently pegged at $1.22 billion, indicating an improvement of 20.7% from the prior-year quarter’s reported figure.

Non-GAAP earnings per share are projected in the range of $1.39-$1.45. The consensus mark for the bottom line is pegged at $1.44 per share, suggesting growth of 21% from the year-ago quarter’s reported figure.

The company has a trailing four-quarter earnings surprise of 15.9%, on average.

Keysight Technologies Inc. Price and EPS Surprise

 

Keysight Technologies Inc. Price and EPS Surprise

Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote

 

Factors Likely to Impact Q3 Results

Keysight’s performance is expected to have benefited from acceleration in chip design activity in the semiconductor space. The company’s robust software test automation capabilities are likely to have driven software and services revenues.

Increasing demand for the company’s semiconductor measurement solutions, as companies develop chips with next-generation process technologies, is anticipated to have positively contributed to fiscal third-quarter top line.

Stabilizing automotive market is also likely to have driven the company’s performance in fiscal third quarter. The company’s solutions for automotive market is expected to reflect incremental gains owing to increasing investments in electronic vehicle and autonomous vehicle technologies.

The company’s portfolio comprises latest solutions like power semiconductor technology, AC power emulation, millimeter wave radar, automotive ethernet, C-V2X and cyber security software systems

Solid uptake of the company’s semiconductor as well as general electronics measurement and automotive solutions is likely to contribute to the Electronic Industrial Solutions Group’s (EISG) segmental revenues.

The Zacks Consensus Estimate for EISG revenues is at $348 million, suggesting growth of 38.6% from the prior-year quarter’s reported figure.

Strength in aerospace, defense & government (“ADG”) end markets, driven by increasing investments in defense technology upgrade across most key regions, is likely to have favored the Communications Solutions Group’s (CSG) segment.

Keysight is expected to have benefited as countries have accelerated investments toward signal monitoring, electro-magnetic spectrum operations, space, satellite and advanced commercial technology applications that include 5G and early 6G research.

Continuation of remote work and online learning set up due to the pandemic has spiked demand for high-speed connectivity. This is expected to have boosted the uptake of the company’s 5G testing solutions in fiscal third quarter.

Accelerated 5G deployment and higher investments in 400G and 800G ethernet for data centers is expected to have aided the Commercial Communications unit’s top line.

The Zacks Consensus Estimate for CSG is pegged at $874 million, indicating 15% growth from the year-ago period’s reported number.

Supply chain disruptions stemming from COVID-19 crisis along with higher expenses on product development are likely to have exerted pressure on margin expansion in the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t predict an earnings beat for Keysight this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Keysight has an Earnings ESP of 0.00% and a Zacks Rank #3, currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth keeping a tab on, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Agilent Technologies (A - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems (CSCO - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank of 3 at present.

salesforce.com, inc. (CRM - Free Report) currently has an Earnings ESP of +1.02% and a Zacks Rank of 3.

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