Keysight Technologies stock rating downgraded by Morgan Stanley on acquisition concerns

Investing.com - Morgan Stanley downgraded Keysight Technologies (NYSE:KEYS) from Overweight to Equalweight on Friday, while maintaining a price target of $180.00. The stock, which has gained over 28% in the past six months and currently trades near $171, has attracted positive attention from analysts, with InvestingPro data showing 8 analysts recently revising earnings estimates upward.

The downgrade comes as Keysight prepares to close two acquisitions - the PowerArtist business from Ansys and Spirent’s business excluding its high-speed Ethernet division.

Morgan Stanley expressed caution about potential material upside to numbers in the near term, despite expectations that both acquisitions will be accretive to earnings.

The investment bank noted that Keysight remains a "well-managed, well-exposed company" that should continue to see estimate revisions move higher as its Communications business experiences tailwinds.

Morgan Stanley also highlighted challenges in catalyzing a rerating of the stock, citing Keysight’s reluctance to break out the size of its AI business as part of the Communications segment.

In other recent news, Keysight Technologies , Inc. has launched the UALink 1.0 transmitter test solution aimed at enhancing compliance testing for high-speed interconnects in AI data centers. This new application automates electrical measurements, significantly reducing testing time when paired with Keysight’s UXR Real-Time Oscilloscope. Additionally, the University of Texas at Austin has selected Keysight’s 6G solutions for advancing research on digital twins, which will aid in exploring applications for wireless and autonomous systems. In the electric vehicle sector, Keysight introduced the EV2020B and EV2020BE platforms to provide scalable testing solutions for automakers and EV supply equipment manufacturers. Furthermore, Keysight released the WirelessPro 3GPP AI Simulation Platform, a tool for wireless communication system engineers that integrates artificial intelligence and machine learning capabilities. The company also unveiled millimeter-wave frequency extender modules and a precision calibration kit to support sub-terahertz frequency testing. These developments highlight Keysight’s ongoing innovation across various technology sectors.

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