Shares of Agilent Technologies (A - Free Report) hit a new 52-week high of $63.63 on Aug 29, before closing a tad lower at $63.02.
The company’s shares have charted a solid trajectory in recent times, increasing 39.4% year to datecompared with the industry’s gain of 32.3%.
Currently, Agilent carries a Zacks Rank #3 (Hold). Moreover, it has a market cap of approximately $20.4 billion. Average volume of shares traded in the last three months was roughly 1,865K.
What is Driving Agilent Technologies?
Agilent Technologies is a broad-based OEM of test and measurement equipment. The company has shifted its focus to life sciences, genomics, diagnostics and wireless test markets, in which it has made a few important acquisitions and alliances.
The price appreciation can be attributed to Agilent’s strong fundamentals and better-than-expected earnings results. Notably, the company has witnessed a 6.9% increase in share price following its encouraging third-quarter fiscal 2017 results, which were released on Aug 15.
Agilent reported earnings of 59 cents per share, surpassing the Zacks Consensus Estimate by 7 cents supported by double-digit growth in its Chemical & Energy business and strength in Pharma. Revenues of $1.11 billion came above the Zacks Consensus Estimate as well as management’s own guided range of $1.06–$1.08 billion. Growth was broad based across most of the company’s portfolios. On a geographic basis, China continued to do well.
Moreover, the company provided a solid guidance for the upcoming quarter and raised the guidance for full fiscal 2017. Agilent now projects fiscal 2017 revenues between $4.435 billion and $4.455 billion compared with the prior guidance of $4.36-$4.38 billion. Also, non-GAAP earnings per share are now expected in the range of $2.29-$2.31 compared with the previous guidance of $2.15-$2.21.
Agilent’s recent acquisition of U.K.-based Cobalt Light Systems will also allow it to strengthen its presence in the high-growth Raman spectroscopy market. The deal complements Agilent’s own product expansion efforts with a promise to help it offer better services to its pharmaceutical and biopharma customers.
Also, Agilent has an impressive record of returning cash to its shareholders through share buybacks and regular dividend payouts. In the fiscal third quarter, Agilent did not repurchase and shares but paid out $42 million as dividends.
Moreover, management’s decision to divest/wind up underperforming businesses speaks volumes about the new, more-focused Agilent. Management is also committed to the expansion of a solid recurring revenue base and diversification of geographic and industrial operations for growth. Also, the company’s focus on aligning investments toward more attractive growth avenues and innovative product launches is a positive.
Additionally, Agilent delivered an average positive earnings surprise of nearly 13.98% over the trailing four quarters. The company’s solid market position, acquisition strategy, increased focus on segments with growth potential, continued innovation and strong long-term growth potential position it well.
Upward Estimate Revision
Estimates for fiscal 2017 as well as for fiscal 2018 have moved north over the last 30 days, reflecting analysts’ confidence in Agilent. During this period, the Zacks Consensus Estimate for fiscal 2017 increased around 4.5% to $2.32 per share. The Zacks Consensus Estimate for fiscal 2018 inched up 2.4% to $2.59 per share.
Some better-ranked stocks in the broader technology sector are Lam Research Corporation (LRCX - Free Report) , Stamps.com Inc. (STMP - Free Report) and PetMed Express, Inc. (PETS - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.
Stamps.com Inc. came up with a positive earnings surprise of 30.64%, on average, in the last four quarters.
PetMed Express delivered a positive earnings surprise of 10.78%, on average, in the trailing four quarters.
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