Keysight Technologies, Inc. (NYSE: KEYS) is a specialist in test and measurement equipment and software for electronics products. The company is headquartered in Santa Rosa, CA. It has a market capitalization of $25.5 billion.
Solid fundamentals and robust growth prospects have built the momentum for this hardware provider, with its shares having surged 274.4% in the past five years. Shortening the timeframe to one year, Keysight touched its all-time high of $209.08 in December 2021.
Now, let’s explore why Keysight has been successful in grabbing investors’ attention.
Upbeat Performance
Keysight has impressed investors with its better-than-expected results in the last seven quarters.
It kept its winning streak alive in the second quarter of Fiscal 2022 (ended April 30, 2022). The second-quarter results were reported by the company on May 17.
Keysight’s second-quarter non-GAAP earnings of $1.83 per share exceeded the consensus estimate of $1.68 by 8.9%. Meanwhile, revenues of $1.35 billion surpassed the consensus estimate of $0.88 billion.
The company’s bottom line was way above the management’s projection of $1.63-$1.69 per share for the quarter. Also, the top line surpassed the guidance range of $1.29 billion to $1.31 billion.
Keysight’s President and CEO, Satish Dhanasekaran, opined that strong demand for a “broad-based portfolio of differentiated solutions” and “successful navigation of “the geopolitical and supply chain challenges” were beneficial in the quarter.
Robust Projections
For the third quarter, Keysight anticipates revenues within the $1.33-$1.35 billion range, representing year-over-year growth of 7%-8%. Non-GAAP earnings are forecast in the range of $1.74 per share to $1.80 per share.
The consensus estimate for non-GAAP earnings is pegged at $1.75 per share. Analysts anticipate the company to post revenues of $1.34 billion in the third quarter.
Further, the company expects its revenues to grow 8% year-over-year in the Fiscal Year 2022 (ending October 2022), higher than the prior expectation of 6%-7%. Non-GAAP earnings per share are likely to grow in the range of 14%-15% versus 12% anticipated earlier.
Growth Drivers
Keysight’s presence in diversified end markets has been beneficial over time. Its orders are increasing impressively in energy, automotive, electronics, aerospace and defense, and semiconductor markets, proving to be major top-line boosters.
Also, businesses are flourishing in the Americas and the Asia Pacific regions and showing improvements in Europe. The company’s focus on innovation, providing clean technologies, investment in growth opportunities, and zeal to reward shareholders with share buybacks are working in its favor.
At this juncture, it is worth mentioning that Keysight’s orders grew 12% CAGR between 2017 and 2021, and revenues expanded 11%. Also, earnings per share advanced at a 25% CAGR.
Positively Skewed Data
On May 17, Mehdi Hosseini of Susquehanna maintained a Buy rating on Keysight with a price target of $222 (58.15% upside potential).
Overall, the Street is optimistic about KEYS and has a Strong Buy consensus rating based on three Buys and one Hold. Keysight’s average price target stands at $186, representing 32.51% upside potential from current levels.
Moreover, the news sentiments are 100% Positive about the stock. Also, the financial bloggers on TipRanks are 100% Bullish on KEYS, compared with the sector average of 68%.
Conclusion
Solid past performances and future growth opportunities seem to be enhancing Keysight’s investment appeal. Also, its efforts to effectively deal with the prevalent headwinds are encouraging. At the current levels, gaining exposure to the stock might be advantageous.
Discover new investment ideas with data you can trust.
Read full Disclaimer & Disclosure
