On Tuesday, an analyst from Goldman Sachs increased the price target for Keysight Technologies (NYSE:KEYS), a renowned electronics test and measurement equipment provider. The new price target is set at $175.00, up from the previous $172.00, while the firm's Buy rating on the stock remains unchanged.
Keysight Technologies reported its second-quarter financial results for fiscal year 2024, with revenue reaching $1.22 billion and non-GAAP earnings per share (EPS) at $1.41. These figures slightly surpassed Wall Street's expectations by 1% and $0.02, respectively.
However, the company's orders for the quarter showed a year-over-year decline of 8% at $1.219 billion but remained relatively stable compared to the previous quarter. The book-to-bill ratio, an indicator of future revenue, stood at 1.00.
For the third quarter of fiscal year 2024, Keysight has provided guidance that indicates revenues and EPS might fall short of analyst expectations. The company forecasts revenue of approximately $1.19 billion and EPS of $1.33 at the midpoint, which is 2% and $0.12 lower than Wall Street's projections, respectively.
Despite the slight downturn in the third-quarter forecast, Goldman Sachs remains optimistic about Keysight's prospects. The stable book-to-bill ratio is seen as a positive sign, especially after it had dipped below 1 in four of the past five quarters. The analyst also highlighted that the current business downturn, which has persisted for six quarters, is likely nearing its end based on historical patterns.
The long-term outlook for Keysight is bolstered by several factors, including the company's involvement in sectors with strong secular trends. These include artificial intelligence-related spending within the Communication Solutions Group, advancements in semiconductors, development of new 5G protocols and the anticipation of 6G, as well as research and development in electric and autonomous vehicles and their electronics.
Additionally, Keysight's increasing mix of software and services, which now accounts for nearly 40% of revenue, is expected to contribute to the company's resilience and support higher margins in the long term.
InvestingPro Insights
Amid the recent financial updates and market analysis of Keysight Technologies, current InvestingPro data provides additional context that could be crucial for investors considering the company's stock. With a market capitalization of $27.89 billion and a P/E ratio standing at 29.33, Keysight is valued significantly by the market. The company's revenue for the last twelve months as of Q2 2024 was reported at $5.168 billion, indicating a notable decline of 7.55%. Despite this decrease, Keysight maintains a strong gross profit margin of 64.16%, underscoring the efficiency of its operations.
InvestingPro Tips reveal that Keysight is trading at a high earnings multiple, which may reflect investors' confidence in its future growth prospects, despite analysts anticipating a sales decline in the current year. Additionally, the company's stock typically exhibits low price volatility, suggesting it could be a stable addition to portfolios. For investors seeking more comprehensive analysis, there are over 10 additional InvestingPro Tips available, which can be accessed with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
These insights, combined with the analyst's upbeat perspective on Keysight's long-term potential in emerging technological sectors, paint a picture of a company facing current headwinds but with strong fundamentals and promising market positions. Investors should consider these factors alongside the broader market context when evaluating Keysight Technologies as a potential investment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.