Keysight Technologies Inc. (KEYS - Free Report) recently teamed up with Nokia to roll out the Open Test Automation Project (OpenTAP).
OpenTAP is an open-source project offering a scalable architecture to software developers. The aim is to devise innovative automation tools to accelerate testing and measurement methods for production processes utilized in 5G network equipment.
Improving scalability and advancing the development of test-automated solutions is expected to enhance efficiency and economies of scale, consequently reducing time-to-market. This bodes well for both the companies and for test and measurement equipment industry in general.
Markedly, at MWC 2019 event in Barcelona, Keysight and Nokia showcased the capabilities of OpenTAP project. Notably, developers can be part of the community and the open source code repository can be accessed on Gitlab.
Coming to the price performance, shares of Keysight have gained 40% in the past year, outperforming the industry’s rally of 27.3%.
Growing Demand of Test Solutions: A Key Catalyst
Keysight is leaving no stone unturned to enhance electronic design and testing instrumentation solutions with robust collaborations and strategic deals.
Electronic devices form the very fulcrum of IoT services, wireless devices, data centers and 5G technologies. The rapid adoption of these devices is increasing demand for electronics testing equipments.
Sturdy efforts toward the ongoing modification of the Internet infrastructure, evolution of smart cars & autonomous-driving vehicles is fueling demand in the space.
OpenTAP project aimed at bolstering innovation in the electronics testing methods is expected to enhance Keysight’s solutions, which in turn will favor adoption rate.
Notably, Keysight boasts of a strong 5G product design validation solutions portfolio. The company’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. Apart from strength in 5G, Keysight’s efforts in other emerging growth markets like IoT and high-speed data centers bodes well.
Moreover, per MarketsandMarkets data, test and measurement equipment market is projected to be $32.3 billion by 2024 at a CAGR of 3.9% from the estimated valuation of approximately $25.7 billion in 2018.
We believe the aforementioned factors favor the growth prospects of the OpenTAP project.
The fact that OpenTAP embraces an open-source platform, which is lately becoming a favorite among software developers, provides leverage to the project.
We believe growing proliferation of electronic content in vehicles, momentum in space and satellite applications, and rising adoption of driver-assistance systems to be a tailwind.
However, increasing investments on product enhancements is likely to weigh on margin expansion at least in the near term.
Zacks Rank & Key Picks
Currently, Keysight carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader sector, include Cadence Design Systems (CDNS - Free Report) , Verint Systems Inc. (VRNT - Free Report) and j2 Global, Inc. (JCOM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Cadence, Verint and j2 Global is pegged at 11%, 11% and 8%, respectively.
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