Shares of Keysight Technologies (KEYS) have risen faster than the Technology Select Sector SPDR (XLK) so far this year.
The stock may not have run out of power yet. Thus, I am still bullish on it. (See KEYS stock charts on TipRanks)
Based in Santa Rosa, California, Keysight Technologies focuses on electronics and radio, as it manufactures various technologies consisting of test solutions and measurement equipment. The company also designs software for its customers.
Q3 Results
In the third quarter of fiscal 2021, which ended on July 31, 2021, Keysight Technologies reported that it earned $1.25 billion in revenue, a 23% year-over-year increase. Total revenue beat analysts’ projections by about $30 million.
Thanks to this improvement, which demonstrated resilience against supply chain challenges, the company could close the income statement with adjusted earnings of $1.54 per share, beating the consensus average by $0.10.
A Bright Future Ahead
The future has plenty of growth opportunities for Keysight, including 5G technology and the semiconductor industry. Telecommunication service providers, and device manufacturers are investing billions of dollars in these markets globally.
Next Move Strategy Consulting estimates that the market for 5G technology will exceed $620 billion in 10 years, up more than 100 times from the current level.
The semiconductor market is expected to exceed $830 billion in 2024, growing by almost 35% in just four years, according to some forecasts reported by Statista.
As well, Keysight researchers are already working on 5G successors.
Looking Ahead
The company expects revenue between $1.25 billion and $1.27 billion for Q4, ahead of analysts’ projections of $1.22 billion. From this top line, fourth-quarter activities should let adjusted earnings fall in a range between $1.59 to $1.65 per share, while analysts forecast an average of $1.64.
Wall Street’s Take
In the past three months, seven Wall Street analysts have issued 12-month price targets for Keysight Technologies. The average KEYS price target is $181.57, implying 4.8% upside.
The analyst rating consensus is a Moderate Buy rating, based on four Buy, three Hold, and zero Sell ratings.
Summary
Keysight’s skills of resilience against present supply chain issues are underestimated.
It looks strongly positioned, more than expected, to benefit from 5G and semiconductors’ strong tailwinds.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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