Keysight Tech Quarterly Sales Beat Analysts’ Estimates; Street Says Buy

Keysight Technologies outperformed sales expectations in the first quarter as the network solutions provider saw an increase in demand for its products coupled with strong orders.

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However, shares of Keysight Technologies (KEYS) fell about 4% at the end of trading on Feb. 19. The company posted earnings per share (EPS) of $1.43 during the first quarter, which came in ahead of analysts’ expectations of $1.37.

Revenue increased 8% year-on-year to $1.18 billion topping analysts’ estimates of $1.15 billion. Sales growth was attributable to a 4% increase in communications solutions group sales boosted by aerospace, defense and government spending and a 18% increase in electronic industrial solutions sales mainly in the Asia Pacific region.

Keysight CEO Ron Nersesian said, “Order and revenue growth in the quarter was driven by strong execution and robust demand for our broad portfolio of differentiated solutions across all regions. We enter the year with momentum across multiple end markets and confidence in our revenue and earnings growth trajectory.”

Orders grew 7% to $1.22 billion from $1.14 billion in the comparable year-ago period.

Looking ahead to 2Q, Keysight expects revenues to land between $1.19 billion to $1.21 billion with earnings per share to be in the range of $1.29 to $1.35. (See Keysight stock analysis on TipRanks)

Following the quarterly results, Susquehanna analyst Mehdi Hosseini raised Keysight’s price target to $173 (22% upside potential) from $133 and reiterated a Buy rating.

“Expect earnings to enjoy 18%-20% year-on-year growth in FY21-22. Keysight’s diverse portfolio of solutions in key 5G sub-segments and high-speed Networking (like 400/800G) are the key drivers,” Hosseini wrote in a note to investors.

The rest of the Street has a Strong Buy consensus rating on the stock based on 9 Buys and 2 Holds. The average analyst price target of $164 implies about 15.3% upside from current levels. That’s after the stock surged about 50% over the past year.