Keysight Technologies Stock: 5G Stock Rallies on “Exceptional” Q3 Results

Keysight Technologies Inc Raises Full-Year Guidance

Almost everything is in the Cloud these days, and that should raise some concerns for virtually every business on the planet. It’s a good news/cautionary tale, really.

Having everything accessible in the Cloud is certainly convenient, but it makes us reliant on just a few network providers. Amazon.com, Inc (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are responsible for two-thirds of the Cloud infrastructure.

In June 2021, an hour-long Fastly Inc (NYSE:FSLY) outage took down web sites including CNN, The Guardian, The New York Times, “PayPal,” “Reddit,” and “Spotify.” In December of that year, an “Amazon Web Services” outage shut down large swaths of the Internet for seven hours, hitting everything from “IMDb” to “Tinder.” (Source: “Amazon Web Services outage hits sites and apps such as IMDb and Tinder,” The Guardian, December 7, 2021.)

We might never be able to make the Cloud entirely bug-proof, but Keysight Technologies Inc (NYSE:KEYS) provides the 5G network test gear to make it a lot more reliable.

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With a market cap of $30.2 billion, Keysight Technologies is hardly an under-the-radar tech company. Thanks to its size and market domination, it’s been able to report exceptional financial results and raise its full-year guidance in 2022. That’s not something a lot of tech companies have been able to do this year.

Keysight Technologies Inc has taken inflation, rising interest rates, and a looming recession in stride, and its shareholders have big winners. KEYS stock is down by 15% year-to-date and one percent year-over-year, but it’s up by 13% over the last month, 16% over the last three months, and 25% over the last six months.

Those are big moves, but Wall Street thinks Keysight Technologies stock has additional room to run. Analysts have provided a 12-month share-price target of $196.00 to $225.00, which suggests gains in the range of 15% to 28%.

Chart courtesy of StockCharts.com

For the fourth quarter of fiscal 2022, ended October 31, Keysight Technologies Inc expects to report revenue in the range of $1.38 billion to $1.4 billion and adjusted earnings per share (EPS) in the range of $1.94 to $2.00.

For fiscal 2022, the company expects to report that its revenue increased by nine percent.

KEYS Stock Overview

Keysight Technologies is primarily known for its electronic design and testing solutions. It operates through two segments: the Communications Solutions Group and the Electronics Industrial Solutions Group. (Source: “About Keysight,” Keysight Technologies Inc, last accessed November 2, 2022.)

The Communications Solutions Group provides electronic design and testing software, electronic measurement instruments, systems, and related services. The Electronics Industrial Solutions Group provides testing and measurement solutions, as well as related services for certain electronic industrial end markets.

Keysight Technologies Inc has more than 32,000 customers in more than 100 countries, including 25 of the top technology companies. Its customers include a who’s who of the global aerospace, automotive, communications, defense, electronics, energy, industrial, and semiconductor markets.

Record Q3 Revenue & Earnings Top High End of Guidance

For the third quarter of fiscal 2022, ended July 31, Keysight Technologies Inc announced that its revenue increased by 10% year-over-year to a record $1.4 billion. The Communications Solutions Group’s revenue went up by 11%, while the Electronics Industrial Solutions Group’s revenue climbed by 10%. (Source: “Keysight Technologies Reports Third Quarter 2022 Results,” Keysight Technologies Inc, August 17, 2022.)

The company’s orders grew in the third quarter by 12% to $1.5 billion.

Keysight Technologies reported record third-quarter net income of $338.0 million, or $1.87 per share, up by 33% over the third-quarter 2021 net income of $254.0 million, or $1.36 per share. Its adjusted net income went up by 27% in the third quarter to $363.0 million, or $2.01 per share.

During the third quarter, the company repurchased 1.6 million shares of Keysight Technologies stock at an average price of $139.46, for a total cost of $228.0 million.

The company ended the quarter with cash and cash equivalents of $1.9 billion and total debt of $2.0 billion.

Satish Dhanasekaran, Keysight Technologies Inc’s president and CEO, noted, “Keysight delivered an exceptional third quarter, with both revenue and EPS exceeding the high end of guidance…Keysight’s deep customer engagements with industry leaders, and high value, differentiated solutions continue to drive broad-based demand across key technology mega trends.” (Source: Ibid.)

Analyst Take

Keysight Technologies Inc is an excellent tech company.

Despite global macroeconomic headwinds, the company reported record third-quarter financials and raised its full-year guidance. This bodes well for Keysight Technologies stockholders.