Keysight Stock Rises Sharply. Here's Why. -- Barrons.com

By Mackenzie Tatananni

Keysight Technologies was rising sharply in premarket trading Wednesday after the test-equipment maker beat analysts' earnings expectations.

Keysight stock was trading up 9.4% at $166 before markets opened. Coming into Wednesday, the stock has fallen 4.4% this year.

The tech hardware giant, which partners with industry heavyweights like Amazon and Microsoft, earned $1.65 a share on an adjusted basis in the fiscal fourth quarter, topping analysts' estimates of $1.57. While revenue dipped 1.8% to $1.29 billion, it still exceeded a forecasted $1.26 billion.

New orders were up 8% quarter over quarter and 1% from a year ago, slightly beating expectations.

The company's Communications Solutions Group reported revenue of $894 million in the fourth quarter, up from $891 million last year.

Keysight has embraced the artificial-intelligence boom, with investments related to the technology driving a 4% increase in commercial communications over the preceding three months.

Meanwhile, its Electronic Industrial Solutions Group reported revenue of $393 million for the same period, down 6% from a year prior.

While demand for semiconductors has risen, Keysight noted ongoing constraint in manufacturing-related customer spending, with flat automotive sales and stable demand from the general electronics market.

Much of the company's current momentum is driven by high-speed networking and AI, but Susquehanna analyst Mehdi Hosseini also identified a stabilization in wireless demand.

"What is encouraging is the trend within wireless, suggesting customers' inventory is beginning to normalize," Hosseini wrote. The analyst rates the stock at Positive with a price target of $185.

Total costs and expenses jumped to $1.06 billion from $994 million last year. The company also recorded a $315 million tax expense in the fourth quarter, attributing it to a new tax incentive in Singapore.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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November 20, 2024 08:30 ET (13:30 GMT)

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