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Why Keysight (KEYS) is an Enticing Pick Post Q3 Earnings
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Shares of Keysight Technologies, Inc. (KEYS - Free Report) have soared 10% over the past three months, driven by healthy revenues on the back of a flexible business model and solid market response for cost-effective solutions. The company reported strong third-quarter fiscal 2022 results, with both the top line and the bottom line beating the respective Zacks Consensus Estimate.
Backed by robust order trends, the company expects this growth momentum to continue despite supply chain headwinds, driven by industry tailwinds such as 5G, IoT and high-speed data centers. Earnings estimates for the current and next fiscal for Keysight have increased 11.7% and 12%, respectively, over the past year, implying healthy inherent growth potential. With solid fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a promising investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Based in Santa Rosa, CA, Keysight is a leading provider of electronic design and test instrumentation systems. It aids customers with end-to-end scalable model solutions loaded with robust test and measurement know-how to reduce time-to-market and enhance efficiency in a cost-effective manner. Keysight’s suite of connected car test solutions includes Virtual Drive Test Toolset, which facilitates automakers to build virtual test routes in the lab by integrating network and channel emulation capabilities and combining data captured in the field. The company is also evolving its expertise in software test automation capabilities.
Electronic devices form the fulcrum of IoT services, wireless devices, data centers and 5G technologies. The rapid adoption of these devices is increasing the demand for electronics testing equipment. Further, technological advancements in mobile communications, semiconductors and automotive markets are likely to drive growth. Moreover, the rising demand for power management applications is a key catalyst. Solid efforts toward the modification of the Internet infrastructure and evolution of smart cars & autonomous-driving vehicles bode well. Additionally, medical devices and pharmaceutical markets hold immense potential, thanks to the growing usage of electronics-based testing equipment.
Keysight boasts 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, Keysight’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. It has upgraded its 5G Network Emulation Solution that leverages its proprietary UXM 5G Wireless Test Platform, an integrated and compact signaling test platform that emulates a 5G NR network.
The UXM 5G platform supports protocol compliance and functional key performance analytics across both sub-6GHz and mmWave spectra. The improved design features will offer extended frequency range coverage, flexible use of wider bandwidth resources, increased processing power to support more carrier aggregation and superior uplink capabilities for comprehensive multi-SIM support for 5G/4G network combinations.
It recently secured the industry’s first accreditation for 5G NR test cases that support Release 16 (Rel-16) specifications from PTCRB. The approval strengthens Keysight’s leading position in the 5G validation tools segment. It unlocks the potential for vendors to accelerate their design verification processes for smart city, smart factory and autonomous vehicles.
Keysight is reportedly the first test equipment vendor to offer 5G device test solutions for all phases of 5G development – from early 5G research projects through support for pre-5G commercialization to the first-to-market solutions for the trial of the 3GPP 5G NR standards. It works closely with all the key chipset makers and has gained key insights into varied 5G device test platforms and solutions, making it an ideal choice for all 5G device testing metrics for the industry.
Apart from strength in the 5G domain, Keysight’s efforts in other emerging growth markets like IoT and high-speed data centers bode well for the top line. Particularly, management’s focus on Automotive and Energy, and Aerospace and Defense domains augurs well in the long haul. The company 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.
The stock has a long-term earnings growth expectation of 11%. It delivered an earnings surprise of 9.3%, on average, in the trailing four quarters and currently appears to be an enticing investment option in this volatile market.
Other Key Picks
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 31% since September 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Spirent Communications plc (SPMYY - Free Report) carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since September 2021, while that for the next year is up 11.8%.
Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 12.9% since February 2022.
Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices.
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Why Keysight (KEYS) is an Enticing Pick Post Q3 Earnings
Shares of Keysight Technologies, Inc. (KEYS - Free Report) have soared 10% over the past three months, driven by healthy revenues on the back of a flexible business model and solid market response for cost-effective solutions. The company reported strong third-quarter fiscal 2022 results, with both the top line and the bottom line beating the respective Zacks Consensus Estimate.
Backed by robust order trends, the company expects this growth momentum to continue despite supply chain headwinds, driven by industry tailwinds such as 5G, IoT and high-speed data centers. Earnings estimates for the current and next fiscal for Keysight have increased 11.7% and 12%, respectively, over the past year, implying healthy inherent growth potential. With solid fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a promising investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Based in Santa Rosa, CA, Keysight is a leading provider of electronic design and test instrumentation systems. It aids customers with end-to-end scalable model solutions loaded with robust test and measurement know-how to reduce time-to-market and enhance efficiency in a cost-effective manner. Keysight’s suite of connected car test solutions includes Virtual Drive Test Toolset, which facilitates automakers to build virtual test routes in the lab by integrating network and channel emulation capabilities and combining data captured in the field. The company is also evolving its expertise in software test automation capabilities.
Electronic devices form the fulcrum of IoT services, wireless devices, data centers and 5G technologies. The rapid adoption of these devices is increasing the demand for electronics testing equipment. Further, technological advancements in mobile communications, semiconductors and automotive markets are likely to drive growth. Moreover, the rising demand for power management applications is a key catalyst. Solid efforts toward the modification of the Internet infrastructure and evolution of smart cars & autonomous-driving vehicles bode well. Additionally, medical devices and pharmaceutical markets hold immense potential, thanks to the growing usage of electronics-based testing equipment.
Keysight boasts 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, Keysight’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. It has upgraded its 5G Network Emulation Solution that leverages its proprietary UXM 5G Wireless Test Platform, an integrated and compact signaling test platform that emulates a 5G NR network.
The UXM 5G platform supports protocol compliance and functional key performance analytics across both sub-6GHz and mmWave spectra. The improved design features will offer extended frequency range coverage, flexible use of wider bandwidth resources, increased processing power to support more carrier aggregation and superior uplink capabilities for comprehensive multi-SIM support for 5G/4G network combinations.
It recently secured the industry’s first accreditation for 5G NR test cases that support Release 16 (Rel-16) specifications from PTCRB. The approval strengthens Keysight’s leading position in the 5G validation tools segment. It unlocks the potential for vendors to accelerate their design verification processes for smart city, smart factory and autonomous vehicles.
Keysight is reportedly the first test equipment vendor to offer 5G device test solutions for all phases of 5G development – from early 5G research projects through support for pre-5G commercialization to the first-to-market solutions for the trial of the 3GPP 5G NR standards. It works closely with all the key chipset makers and has gained key insights into varied 5G device test platforms and solutions, making it an ideal choice for all 5G device testing metrics for the industry.
Apart from strength in the 5G domain, Keysight’s efforts in other emerging growth markets like IoT and high-speed data centers bode well for the top line. Particularly, management’s focus on Automotive and Energy, and Aerospace and Defense domains augurs well in the long haul. The company 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.
The stock has a long-term earnings growth expectation of 11%. It delivered an earnings surprise of 9.3%, on average, in the trailing four quarters and currently appears to be an enticing investment option in this volatile market.
Other Key Picks
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 31% since September 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Spirent Communications plc (SPMYY - Free Report) carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since September 2021, while that for the next year is up 11.8%.
Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 12.9% since February 2022.
Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices.