Agilent Up 5% On Solid Revenue Beat, But Top Analysts Stay Cautious

Shares in Agilent Technologies (A) rose 5% on Friday after the company reported revenue of $1.24B which beat Street estimates by $40M and came in flat on a year-over-year (y/y) basis.

Q2 Non-GAAP EPS of $0.71 beat consensus by $0.10, although GAAP EPS of $0.32 misses by $0.17. The stock is now down 0.4% since the beginning of the year.

Operating profit rose 2.2% y/y to $277M, while core revenue declined 1.7% y/y, reflecting the impact of Covid-19 business disruption (particularly within academic & government and chemical & energy end-markets).

 “Our business was tracking well into late March when we experienced significant disruption in the U.S. and Europe as customers closed or restricted access to their facilities to slow the spread of COVID-19,” said Mike McMullen, Agilent president and CEO.

“I believe we are well-positioned to face the challenges brought on by COVID-19 given our focus on growth, a resilient business model, a strong balance sheet, and most importantly, our outstanding team” he added.

Following earnings, Needham’s Stephen Unger reiterated his Hold rating without a price target. “Considering the COVID-19 environment, A’s FY2Q20 results were solid with adj. EPS growing 0.6% y/y to $0.71 – $0.04 below our model” he wrote.

As a result, the analyst lowered his FY20 adj. EPS estimate from $3.42 to $3.02 (3% decline from FY19) on revenues of $5.122B (1.8% core revenue decline), a $388M reduction from his previous forecast.

“Given increased downside potential associated with business disruption from the COVID-19 pandemic, we consider the lower half of the [stock’s current] trading range to approximate fair value ($79.00-89.00)” Unger told investors on May 22.

Indeed, the majority of analysts covering A rate the stock a hold, with 7 recent hold ratings vs 4 buy ratings. The $89 average analyst price target indicates upside potential of 5%.  (See Agilent stock analysis on TipRanks)

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