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Keysight (KEYS) Updates Outlook Amid Coronavirus Outbreak

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Keysight Technologies Inc. (KEYS - Free Report) recently announced that due to the coronavirus pandemic, it may not be able to meet second-quarter fiscal 2020 guidance provided in the last earnings call. The company had to temporarily shut down many of its locations globally until at least the end of March.

For second-quarter fiscal 2020, the company initially expected revenues in the range of $1.138-$1.178 billion. The Zacks Consensus Estimate is currently pegged at $1.17 billion, which indicates year-over-year growth of 7.2%.

Moreover, non-GAAP earnings per share were projected in the range of $1.28-$1.38. The Zacks Consensus Estimate for earnings is currently pegged at $1.36, which indicates year-over-year growth of 11.5%.

Keysight Technologies Inc. Price and Consensus

 

Partnerships to Drive Long-Term Growth

Amid the coronavirus-related uncertainty, Keysight is focusing on emerging markets like 5G and IoT to position itself for long-term sustainable growth.

Recently, the company partnered with VIOMI to accelerate the introduction of 5G enabled IoT devices in the Chinese market. VIOMI will use Keysight’s 5G solutions to validate the radio frequency (RF) performance in its IoT devices for home applications.

Keysight also extended its collaboration with China Academy of Information and Communications Technology (CAICT) to accelerate the 5G new radio (NR) base station performance test plan in the country.

These endeavors are expected to enable Keysight to capitalize on the growing wireless ecosystem primarily supported by advancement in 5G investment. Intensive infrastructure investments in 5G deployment and positive trial testing results also bode well.

5G Efforts Deserve a Special Mention

Keysight is well poised to address the highly competitive 5G IoT endpoint installed base market, which per MarketsAndMarkets, is expected to witness a CAGR of 55.4% between 2020 and 2025.

The company’s solutions are already witnessing robust adoption. Vanchip Technologies recently selected Keysight's 5G test solutions to accelerate performance validation of their 5G RF power amplifiers designed for high-end 5G smartphones.

Keysight’s 5G network emulation solution suite was also used by major U.S. mobile operators to validate more than 600 test cases for their respective 5G device acceptance plans.

As employees are being forced to work from home due to the COVID-19 pandemic, there is an increasing demand for high-speed connectivity. Keysight’s investments in 5G and IoT as well as increasing deal wins are likely to favor its growth prospects in the upcoming days.

Zacks Rank & Other Stocks to Consider

Currently, Keysight carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader technology sector are Applied Materials, Inc. (AMAT - Free Report) , Garmin Ltd. (GRMN - Free Report) and Microsoft Corporation (MSFT - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Applied Materials, Garmin and Microsoft is currently pegged at 9.9%, 7.4% and 13.2%, respectively.

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