Keysight Approves $750M Share Buyback After 4Q Profit Win

Keysight Technologies reported better-than-expected 4Q results driven by strong demand for next-generation commercial communications technologies and semiconductor measurement tools. Increased global aerospace defense and government investment also boosted its quarterly results.

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Keysight’s (KEYS) 4Q revenues grew 9% to $1.22 billion and surpassed analysts’ expectations of $1.18 billion. Adjusted EPS of $1.62 topped the Street’s estimates of $1.46 and increased 21.8% from the year-ago quarter’s earnings of $1.33 per share.

Keysight CEO Ron Nersesian said, “Keysight delivered an outstanding quarter and finish to our fiscal year, driven by strong execution and broad-based demand for our differentiated solutions. Despite COVID-related macro challenges, it was a record year for orders, gross margin, operating margin, earnings per share and free cash flow.”

Concurrent with its 4Q results, Keysight announced that its board has approved a new $750 million share repurchase program. (See KEYS stock analysis on TipRanks)

For 1Q, Keysight projects revenues between $1.14 billion and $1.16 billion. Adjusted EPS for the quarter are forecasted to be in the range of $1.32-$1.38. The company’s top and bottom-line guidance ranges exceeded Wall Street expectations of $1.11 billion and $1.21 per share, respectively.

On Nov. 16, Deutsche Bank analyst Matthew Niknam initiated coverage on the stock with a Buy rating and price target of $129 (12% upside potential). In a note to investors, Niknam said that the company is a market leader in a $17.5 billion addressable market for electronic design, test and measurement space. The analyst forecasts that the company is likely to witness 5% annual revenue growth through fiscal 2023.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 10 Buys and 1 Hold. The average price target stands at $126.64 and implies upside potential of about 10% to current levels. Shares have increased by 12.2% year-to-date.