Gold prices dip as hawkish Fed minutes weigh ahead of Jackson Hole
On Wednesday, Susquehanna reiterated a positive outlook on Keysight Technologies (NYSE:KEYS) with a consistent price target of $195.00, well above the current trading price of $169.41. The firm’s analysis highlighted the company’s earnings report, which signaled the beginning of a recovery in the wireless sector, primarily propelled by advancements in 5G technology. According to InvestingPro data, the stock appears to be trading at premium valuations, with a P/E ratio of 48.2x and high EBIT and EBITDA multiples. This development is occurring alongside continued strength in the wireline segment, where growth is expected to accelerate through 2026 due to the transition to 1.2TB technology, which is anticipated to provide Keysight with increased revenue opportunities compared to the current 800GB standard. With current revenues of $5.02 billion and a healthy gross profit margin of 62.6%, Keysight demonstrates strong operational efficiency. Want deeper insights? InvestingPro offers exclusive access to over 30 additional financial metrics and analysis tools.
The analyst from Susquehanna pointed out that the earnings recovery for Keysight could be further bolstered by a rebound in government and defense spending, especially from the European Union. This increase in spending is likely to coincide with the scaling of leading-edge semiconductor opportunities as the next-generation N2 node advances to high-volume manufacturing (HVM) by the end of 2025. The company maintains a moderate debt level with a debt-to-equity ratio of 0.39 and strong liquidity, as evidenced by a current ratio of 2.95. According to the analyst, the potential for revenue growth could help mitigate the impact of rising costs stemming from new tariff regulations.
Keysight Technologies’ performance in the wireline sector has been robust, and the anticipated acceleration of growth into 2026 is based on the industry’s move towards 1.2TB technology. This shift is expected to present the company with a larger revenue opportunity when compared to the existing 800GB capabilities.
The resurgence in government and defense spending, particularly from the EU, is seen as a positive factor for Keysight’s earnings per share (EPS) recovery. This spending is projected to support the company’s involvement in leading-edge semiconductor technologies as the industry progresses towards the N2 node, which is slated for high-volume manufacturing by the end of 2025.
The analyst concluded that despite the challenges posed by the new tariff regime, the expected revenue upside should partially offset the associated higher costs. This outlook suggests a stable financial path for Keysight Technologies as it navigates the evolving technological landscape and regulatory environment. The company’s financial health score from InvestingPro is rated as "FAIR," with particularly strong scores in profitability (3.37/5) and cash flow (3.01/5).
In other recent news, Keysight Technologies reported impressive financial results for the second quarter of 2025, with earnings per share (EPS) of $1.70, surpassing the forecasted $1.65. The company’s revenue reached $1.31 billion, exceeding the anticipated $1.28 billion, marking a 7% year-over-year growth. Following this announcement, Keysight raised its full-year revenue growth expectation to 5-7%. In addition, JPMorgan increased its price target for Keysight to $177, maintaining an Overweight rating, due to the company’s strong performance and positive third-quarter guidance.
Keysight’s growth was notably driven by advancements in its Wireline segment, with significant deployments of 400G and 800G equipment. The company also highlighted its expansion in AI and defense-related product offerings as a strategic focus. However, Keysight faces challenges from tariff-related costs, estimating an annualized impact of $75-$100 million, with mitigation efforts underway. Despite these headwinds, the company remains confident in its market position and demand outlook, projecting strong performance in the upcoming quarters.
Looking ahead, Keysight anticipates robust demand in its Communications sector, which has helped offset challenges in General Electronics and Autos end-markets. The anticipated acquisition of Spirent (LON:SPT) in fiscal year 2026 is expected to impact margins, but Keysight projects earnings growth to continue. Analysts at JPMorgan noted the resilient growth drivers for Keysight, raising revenue expectations for fiscal year 2026.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.