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On Thursday, Baird increased its price target for Keysight Technologies (NYSE:KEYS), a prominent electronics test and measurement equipment manufacturer, from $160.00 to $163.00. The firm has maintained its Outperform rating on the stock.
The revision follows Keysight Technologies' third fiscal quarter performance, which exceeded both the analyst's and the company's expectations, excluding the benefits from tax rates. The analyst noted that the company experienced robust orders and sales, particularly in the Commercial Communications sector, driven by demand related to artificial intelligence and data centers. This demand has been a key factor in the company's recovery thus far.
Despite the positive results, there were no major operational or market surprises in the latest update. The analyst had anticipated potential risks for the third fiscal quarter, such as incremental softness in the automotive sector and delays in U.S. Aerospace/Defense appropriations, which did materialize.
Keysight's order funnel for the second half of fiscal year 2024 appears to be improving. However, management is maintaining a conservative stance regarding the recovery. The company expects a gradual recovery in fiscal year 2025, but the analyst believes momentum is building in Keysight's favor.
Investors and stakeholders in Keysight Technologies may find this updated price target and the analyst's outlook indicative of the company's current trajectory in a competitive technology market. The company's stock performance and future financial results will likely continue to be influenced by its ability to navigate market risks and capitalize on the growing demand in key sectors such as Commercial Communications.
In other recent news, Keysight Technologies outperformed its Q3 financial expectations, reporting revenue of $1.22 billion and earnings per share (EPS) of $1.57.
This performance surpasses Wall Street's expectations by 2% and $0.22, respectively. Orders for the quarter also saw a slight increase, primarily driven by commercial communications growth. Looking ahead, Keysight expects Q4 revenue and EPS to be approximately $1.26 billion and $1.56 at the midpoint, slightly higher than current market projections.
In terms of analyst ratings, Goldman Sachs maintained its Buy rating on Keysight, while Susquehanna kept a Positive rating but lowered the price target to $185 from $195. BofA Securities also adjusted its outlook, raising its price target from $135 to $150 while maintaining an Underperform rating.
Keysight has also announced plans to expand its serviceable available market and pursue mergers and acquisitions. Notably, the Spirent acquisition has received shareholder approval and is expected to close in the first half of fiscal year 2025.
Furthermore, the company repurchased 1.07 million shares for $150 million, ending the quarter with a strong cash position of $1.6 billion. These are recent developments that investors might find noteworthy.
InvestingPro Insights
In light of Baird's updated price target for Keysight Technologies, real-time data from InvestingPro provides further context for investors considering the company's stock. According to InvestingPro, Keysight Technologies has a market capitalization of $27.38 billion and is trading at a P/E ratio of 29.94, reflecting a market valuation that acknowledges its recent performance and future potential. The company's gross profit margin remains strong at 63.46% over the last twelve months as of Q3 2024, underscoring its efficiency in generating earnings.
InvestingPro Tips suggest that analysts are optimistic about Keysight, with four analysts revising their earnings upwards for the upcoming period, which aligns with Baird's positive outlook. Additionally, the company's stock has seen a significant return over the last week, with an 18.95% price total return, hinting at investor confidence following the recent earnings report. However, it's worth noting that analysts anticipate a sales decline in the current year, which may warrant cautious optimism.
For investors seeking a comprehensive analysis, InvestingPro offers additional tips, which can be accessed through the dedicated page for Keysight Technologies (https://www.investing.com/pro/KEYS). These insights could provide a deeper understanding of the company's financial health and market position.
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