Tuesday, Baird increased its price target on Keysight Technologies (NYSE:KEYS) shares to $167 from $155 while maintaining an Outperform rating.
The firm noted that end demand has shown sequential stability for the second straight quarter. Management at Keysight has reaffirmed its outlook for the second half of fiscal year 2024, anticipating an uptick in the fourth quarter, which is typically seasonal.
The ongoing bottoming process was highlighted, with a particular emphasis on the positive inflection in demand from AI and data center sectors within the Communications-Wireline segment, which experienced double-digit percentage order growth.
Keysight was recognized for its preparedness to serve a variety of application areas. Baird predicts a broader recovery starting in fiscal year 2025, based on current order funnels that indicate an uptick in research and development investments.
The anticipated acquisition of Spirent is projected to contribute over three percentage points to Keysight's earnings per share growth in fiscal year 2025, and even more in the following year. The analyst's outlook reflects confidence in Keysight's market position and the expected benefits from the Spirent deal.
Keysight Technologies has been navigating the market with a steady hand, as evidenced by the stable end demand and the company's consistent management outlook.
The firm's commentary suggests that Keysight is well-positioned to capitalize on the growing demand in the AI and data center markets, which is expected to drive the company's performance in the coming years.
InvestingPro Insights
Keysight Technologies (NYSE:KEYS) is currently navigating the market with a keen eye on growth and stability. According to real-time data from InvestingPro, Keysight has a market capitalization of $27.89 billion and is trading at a P/E ratio of 29.33, which indicates a high earnings multiple. This aligns with one of the InvestingPro Tips, suggesting that the stock is trading at a high EBITDA valuation multiple as well. With a gross profit margin of 64.16% over the last twelve months as of Q2 2024, the company's profitability is clear. Despite a revenue decline of 7.55% during the same period, the company remains profitable, which is further supported by an operating income margin of 23.89%.
InvestingPro Tips also highlight that Keysight's stock generally trades with low price volatility, which could be appealing for investors looking for stable investments. Additionally, the company's liquid assets exceed short-term obligations, indicating a strong balance sheet. For investors interested in further analysis and additional tips, InvestingPro offers a suite of metrics and insights. Currently, there are 10 more InvestingPro Tips available for Keysight, which interested readers can explore using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With Baird's increased price target and the anticipation of a broader recovery starting in fiscal year 2025, Keysight's outlook seems promising. The InvestingPro Fair Value estimate of $143.78 suggests that investors may want to keep an eye on the stock's performance relative to market expectations.
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