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Keysight Technologies (KEYS)
NYSE:KEYS
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Keysight Technologies
(NYSE:KEYS)
66Neutral
Positive Factors
Demand Drivers
The anticipated closure of the Spirent acquisition enhances Keysight's leverage to a cyclical recovery with operational synergies expected to drive margin improvements.
Earnings Potential
Keysight Technologies is well positioned from a demand standpoint over the next 12 months, leading to upward earnings revision opportunities across FY25.
Revenue Growth
Keysight Technologies is in the early stages of a cyclical recovery with core revenue growth year-over-year for the first time in six quarters.
Negative Factors
Defense Spending Uncertainty
There is some uncertainty tied to near-term defense spending levels and tariffs.
Order Recovery Challenges
The slower orders recovery is reflected in the adjusted EPS estimates, indicating challenges in achieving rapid revenue recovery.
Stock Performance
The recommendation is maintained at Underperform with a price objective of $165, indicating a lack of confidence in significant near-term stock appreciation.
Keysight Technologies (KEYS) vs. S&P 500 (SPY)
Market Cap
$24.63B
Dividend YieldN/A
Average Volume (3M)1.15M
Price to Earnings (P/E)40.8
Beta (1Y)1.77
Revenue Growth-6.07%
EPS Growth-35.80%
CountryUS
Employees15,400
SectorTechnology
Sector Strength40
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)3.49
Shares Outstanding172,810,520
10 Day Avg. Volume1,142,322
30 Day Avg. Volume1,153,516
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)5.32
Price to Cash Flow (P/CF)17.70
P/FCF Ratio17.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$179.50Price Target Upside34.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Keysight Technologies Business Overview & Revenue Model
Company DescriptionKeysight Technologies, Inc. provides electronic design and test solutions to commercial communications, networking, aerospace, defense and government, automotive, energy, semiconductor, electronic, and education industries in the Americas, Europe, and the Asia Pacific. Its Communications Solutions Group segment provides electronic design automation (EDA) software; radio frequency and microwave test solutions, and related software; hardware and virtual network test platforms and software applications, including data center, routing and switching, software defined networking, security, and encryption; oscilloscopes, logic and serial protocol analyzers, logic-signal sources, arbitrary waveform generators, and bit error rate testers; and optical modulation analyzers, optical component analyzers, optical power meters, and optical laser source solutions, as well as resells refurbished used Keysight equipment. The company's Electronic Industrial Solutions Group segment offers design tools; design verification tools; and digital multimeters, function generators, frequency counters, data acquisition systems, audio analyzers, LCR meters, thermal imagers, source measure units, ultra-high precision device current analyzers, and test executive software platforms, as well as various power supplies comprising AC/DC modular supplies and electronically programmable loads. This segment also provides printed-circuit-board-assembly testers, integrated circuit parametric testers, and sub-nano-meter positioning sub-assemblies; and test and measurement products and software. The company offers product support, technical support, and training and consulting services. It sells its products through direct sales force, distributors, resellers, and manufacturer's representatives. Keysight Technologies, Inc. was founded in 1939 and is headquartered in Santa Rosa, California.
How the Company Makes MoneyKeysight Technologies makes money primarily through the sale of its electronic design and test solutions. Its revenue model is based on a combination of hardware product sales, software solutions, and associated services such as calibration and repair. Key revenue streams include sales of its advanced test and measurement instruments, which are crucial for various industries to ensure the performance and reliability of their products. Additionally, Keysight offers software solutions that complement its hardware, enabling customers to enhance productivity and innovation. The company also earns revenue from services such as consulting, training, and support, contributing to a well-rounded customer experience. Significant partnerships with industry leaders and research institutions further enhance its market reach and revenue opportunities.
Keysight Technologies Financial Statement Overview
Summary
Keysight Technologies showcases a strong financial position with solid profitability, efficient cash flow generation, and balanced leverage. Despite the recent slowdown in revenue growth, the company maintains strong margins and robust cash flow ratios, indicating solid operational efficiency and financial health.Income Statement
Keysight Technologies demonstrates strong profitability with a consistent gross profit margin of over 60% and a net profit margin of consistently above 10%. The TTM (Trailing-Twelve-Months) EBIT and EBITDA margins stand robust at 17.9% and 22.5%, respectively. However, the revenue growth rate shows a slight decline in the recent year, with a noticeable decrease from 2023 to 2024.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a stable Debt-to-Equity ratio around 0.4, indicating moderate leverage. The Return on Equity (ROE) is solidly positioned, with a TTM ROE of approximately 11.8%. The Equity Ratio stands strong at 55.2%, showcasing financial stability. There are no significant risks regarding high leverage or low equity.78
Positive
Cash Flow
Keysight Technologies exhibits robust cash flow management with a TTM Free Cash Flow of $995 million and a Free Cash Flow to Net Income ratio well above 1, indicating efficient conversion of net income to cash. The Free Cash Flow Growth Rate from 2024 to TTM is notable, reflecting strong cash generation capabilities.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.02B | 4.98B | 5.46B | 5.42B | 4.94B | 4.22B | Gross Profit |
| 3.13B | 3.53B | 3.53B | 3.45B | 3.07B | 2.53B | EBIT |
| 884.00M | 833.00M | 1.36B | 1.33B | 1.08B | 765.00M | EBITDA |
| 1.12B | 1.11B | 1.65B | 1.58B | 1.38B | 1.16B | Net Income Common Stockholders |
| 611.00M | 614.00M | 1.06B | 1.12B | 894.00M | 627.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 0.00 | 1.80B | 2.47B | 2.04B | 2.05B | 1.76B | Total Assets |
| 0.00 | 9.27B | 8.68B | 8.10B | 7.78B | 7.22B | Total Debt |
| 0.00 | 2.03B | 2.03B | 2.02B | 2.02B | 1.98B | Net Debt |
| 0.00 | 234.00M | -446.00M | -24.00M | -29.00M | 225.00M | Total Liabilities |
| 0.00 | 4.16B | 4.03B | 3.94B | 4.00B | 3.92B | Stockholders Equity |
| 1.30B | 5.11B | 4.65B | 4.16B | 3.78B | 3.30B |
| Cash Flow | Free Cash Flow | ||||
| 995.00M | 898.00M | 1.21B | 959.00M | 1.15B | 899.00M | Operating Cash Flow |
| 1.10B | 1.05B | 1.41B | 1.14B | 1.32B | 1.02B | Investing Cash Flow |
| -341.00M | -819.00M | -288.00M | -251.00M | -353.00M | -442.00M | Financing Cash Flow |
| -439.00M | -913.00M | -687.00M | -861.00M | -671.00M | -413.00M |
Keysight Technologies Technical Analysis
Negative
133.41
Price Trends
160.14
Negative
162.98
Negative
154.88
Negative
Market Momentum
-3.31
Negative
36.78
Neutral
27.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KEYS, the sentiment is Negative. The current price of 133.41 is below the 20-day moving average (MA) of 147.56, below the 50-day MA of 160.14, and below the 200-day MA of 154.88, indicating a bearish trend. The MACD of -3.31 indicates Negative momentum. The RSI at 36.78 is Neutral, neither overbought nor oversold. The STOCH value of 27.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KEYS.
Keysight Technologies Risk Analysis
Keysight Technologies disclosed 38 risk factors in its most recent earnings report. Keysight Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Keysight Technologies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $21.95B | 27.21 | 8.73% | ― | 0.53% | -7.18% | |
73 Outperform | $23.06B | 28.70 | 8.12% | 0.51% | 2.75% | -2.90% | |
70 Outperform | $15.11B | 10.08 | 29.37% | ― | -3.04% | 388.42% | |
68 Neutral | $4.94B | 26.04 | 7.93% | 1.20% | -0.99% | ― | |
66 Neutral | $24.63B | 40.81 | 12.22% | ― | -6.07% | -35.80% | |
57 Neutral | $20.24B | 9.51 | -13.28% | 2.72% | 5.43% | -24.54% | |
53 Neutral | $9.77B | ― | 0.88% | ― | 14.61% | 85.44% |
* Technology Sector Average
Performance Comparison
KEYS
Keysight Technologies
133.41
-26.73
-16.69%
COHR
Coherent Corp
55.44
-0.59
-1.05%
MKSI
MKS Instruments
64.24
-62.15
-49.17%
TDY
Teledyne Technologies
458.93
55.27
13.69%
TRMB
Trimble
58.04
-3.99
-6.43%
FTV
Fortive
63.77
-19.37
-23.30%
Keysight Technologies Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -22.51% | Next Earnings Date: May 20, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance with revenue and EPS exceeding expectations, growth in key segments, and positive order growth. However, challenges persist in the Electronic Industrial Solutions Group, automotive market, and aerospace and defense orders. Overall, the sentiment reflects a balance between positive financial outcomes and ongoing market challenges.Highlights
Strong Revenue and EPS Performance
Keysight reported first-quarter revenue of $1.3 billion and earnings per share of $1.82, both exceeding the high-end of their guidance.
Growth in Communication Solutions Group
The Communication Solutions Group revenue grew 5%, driven by momentum in wireline, stability in wireless, and growth in aerospace, defense, and government.
Positive Order Growth
Orders grew year-over-year for a second consecutive quarter, up 4% to $1.3 billion.
Record Aerospace, Defense, and Government Revenue
Revenue in the aerospace, defense, and government sector grew to a first-quarter record with strength in both the US and Asia.
Software and Services Growth
Software and services accounted for approximately 40% of Keysight's revenue, while recurring revenue was approximately 31% of total revenue.
Cash Flow and Share Repurchase
Keysight generated $378 million in cash flow from operations and repurchased 450,000 shares at an average price of $167.
Lowlights
Challenges in Electronic Industrial Solutions Group
Revenue in the Electronic Industrial Solutions Group was down 1%, reflecting mixed demand across end markets.
Weakness in Automotive Market
The automotive market conditions remain challenging, with muted activity in manufacturing and EV battery development.
Aerospace and Defense Order Decline
Orders in the aerospace, defense, and government sector were down due to ongoing continuing resolutions.
Muted Smartphone Supply Chain
Demand in the smartphone supply chain remains muted, affecting the wireless business.
Company Guidance
In the Keysight Technologies Fiscal First Quarter 2025 Earnings Conference Call, the company provided several key metrics and guidance. Keysight reported strong first-quarter results with revenue of $1.3 billion and earnings per share of $1.82, both surpassing the upper end of their guidance. Core revenues grew for the first time in six quarters, with the Communication Solutions Group experiencing a 5% increase in revenue, driven by momentum in wireline and growth in aerospace, defense, and government sectors. Orders saw a 4% year-over-year increase, totaling $1.3 billion. The company expects second-quarter revenue to range between $1,270 million to $1,290 million and earnings per share between $1.61 and $1.67. Despite a mixed macroeconomic environment and potential policy changes, Keysight maintains its outlook for gradual recovery in 2025, with anticipated revenue growth at the lower end of their 5% to 7% long-term target and earnings growth consistent with their 10% target.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.