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Agilent (A) Q1 Earnings In Line With Estimates, Revenues Top

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Agilent TechnologiesA fiscal first-quarter 2020 earnings of 81 cents per share were in line with the Zacks Consensus Estimate. The bottom line decreased 9% sequentially but increased 7% year over year.

Fiscal first-quarter 2020 revenues of $1.36 billion increased 5.7% year over year (up 2.4% on a core basis). Also, the reported revenues — which came in above management’s guided range of $1.340-$1.355 billion — surpassed the Zacks Consensus Estimate by 0.2%.

The year-over-year revenue growth was driven by strength in all revenue segments.

Agilent was optimistic about the acquisition of BioTek Instruments, Inc., a provider of life science instrumentation. This deal will likely expand the company’s presence in the life science research space. It will further strengthen Agilent’s offerings related to live cell analysis, as these product lines aid in quantification of biomolecules, biomolecular interactions and cellular structure.

However, management expects delays in new equipment purchases in the near term. In addition, it expects a slower uptake of consumables and services due to reduced number of selling days resulting from the extension of Lunar New Year, including other operational factors.

Revenues by Segment

Agilent has three reporting segments — Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG), and Diagnostics and Genomics Group (DGG).

In the reported quarter, LSAG was the largest contributor to total revenues. The segment accounted for $638 million or 47% of its total revenues, reflecting a 5% increase from the prior-year quarter. The strong performance of the company’s biopharma and cell analysis business aided the results.

Revenues from ACG came in at $470 million, accounting for 35% of total revenues. The reported figure reflects a 6% year-over-year increase, driven by growth across all regions and market segments.

Revenues from DGG came in at $249 million, accounting for the remaining 18% of total revenues. The segment’s revenues were up 6% from the year-ago quarter.

Agilent Technologies, Inc. Price, Consensus and EPS Surprise

 

Operating Results

Gross margin in the quarter was 53.3%, down 180 basis points (bps) year over year. The decrease was due to an unfavorable product mix.

Operating expenses (research & development as well as selling, general & administrative) were $508 million, 11.2% higher than the year-ago quarter.

As a result, adjusted operating margin was 15.8%, down 370 bps from the year-ago quarter.

Balance Sheet

At the end of the fiscal first quarter, inventories totaled $706 million, up from $679 million in the prior quarter. Agilent’s long-term debt was $1.79 billion at the end of the quarter. Cash and cash equivalents were $1.23 billion compared with $1.38 billion in fiscal fourth-quarter 2019.

Guidance

Agilent provided guidance for the fiscal second quarter and 2020.

For the fiscal second quarter, the company expects revenues between $1.28 billion and $1.32 billion, and earnings per share in the range of 72-76 cents. The Zacks Consensus Estimate for revenues and earnings per share is pegged at $1.33 billion and 78 cents, respectively.

For fiscal 2020, Agilent maintained its revenue guidance in the range of $5.50-$5.55 billion, indicating core growth of 4-5%. Non-GAAP earnings are projected in the range of $3.38-$3.43 per share.

The Zacks Consensus Estimate for earnings is pegged at $3.41 per share and the same for revenues is $5.53 billion.

Zacks Rank and Other Stocks to Consider

Currently, Agilent has a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Itron, Inc. ITRI, Splunk Inc. SPLK and Teradyne (TER - Free Report) , each carrying a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Itron, Splunk, and Teradyne is currently projected at 25%, 31.2% and 13.2%, respectively.

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