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On Monday, Jefferies maintained a Hold rating on Agilent Technologies, Inc. (NYSE:A) but lowered the price target from $135.00 to $116.00. The adjustment follows a call hosted by Jefferies with Simon May, President of the Life Sciences and Diagnostics Group (LSDG), and Brian Carothers, Vice President & General Manager of LSDG, discussing the company’s Contract Development and Manufacturing Organization (CDMO) business.
During the call, which took place on Thursday, the Agilent executives shared that the CDMO business, valued at approximately $450 million, is experiencing strong order demand. This demand is expected to extend from the second half of 2024 into the first half of 2025. Additionally, they noted that the margins for the Nucleic Acid Solutions Division (NASD) are higher than the company’s average, with the potential for Biovectra, a key component of Agilent’s CDMO business, to increase its margins from the high teens. The company maintains strong financial health with a current ratio of 2.2 and has consistently paid dividends for 14 consecutive years, as noted by InvestingPro.
The executives also highlighted the company’s capacity to support significant growth. They indicated that Agilent has enough capacity to potentially double its revenue base through 2027. This expansion capability is seen as an underappreciated aspect of the company’s free cash flow (FCF) potential.
The price target reduction reflects a more conservative valuation amid the current market conditions. Despite the lower price target, the Hold rating suggests that Jefferies sees the current stock price as fairly valued given the company’s prospects and challenges. Agilent’s shares will continue to be observed by investors as the company strives to capitalize on the strengths of its CDMO business and to enhance its financial performance in the coming years.
In other recent news, Agilent Technologies Inc. has announced significant developments in its cancer diagnostics and therapeutic tools. Agilent’s PD-L1 IHC 22C3 pharmDx assay received European IVDR certification, expanding its use as a companion diagnostic for gastric and gastroesophageal junction adenocarcinoma patients eligible for Merck (NSE:PROR)’s KEYTRUDA treatment. Additionally, Agilent’s PD-L1 IHC 28-8 pharmDx kit gained two new companion diagnostic indications in the EU, now applicable for early-stage non-small cell lung cancer and advanced melanoma. The company’s xCELLigence Real-Time Cell Analysis technology contributed to FDA approval of Autolus Therapeutics (NASDAQ:AUTL)’ CAR T therapy, AUCATZYL®, by aiding in the development and validation of its potency assay.
In corporate governance news, Agilent announced the upcoming resignation of board member Heidi Kunz, effective May 21, 2025, with the company expressing gratitude for her contributions. Analyst firm Stifel maintained a Buy rating on Agilent, with a price target of $151, noting the company’s slight outperformance in first-quarter earnings and revenue. Despite a softer outlook for the second quarter, Agilent’s full-year guidance remains unchanged, expecting about 3% organic growth. The company’s recent product launches and favorable market exposures are seen as positive factors amid current sector challenges.
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