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Factors Setting the Tone for Keysight's (KEYS) Q4 Earnings

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Keysight Technologies Inc. (KEYS - Free Report) is slated to report fourth-quarter fiscal 2019 results on Nov 26.

For fourth-quarter fiscal 2019, the company expects GAAP revenues to be in the range of $1.078 billion to $1.098 billion. Meanwhile, non-GAAP revenues are anticipated between $1.08 billion and $1.10 billion.

The Zacks Consensus Estimate for revenues is pegged at $1.10 billion, indicating an improvement of 4.8% from the year-ago quarter.

Keysight projects non-GAAP earnings per share in the range of $1.14 to $1.20 for the fiscal fourth quarter. We note that the Zacks Consensus Estimate for earnings has declined 0.8% over the past week to $1.18 per share, suggesting growth of 16.8% from the year-ago reported figure.

Notably, the company has surpassed earnings estimates in the trailing four quarters, the average surprise being 18.94%.

Factors Likely to Influence Q4 Results

Robust adoption of electronic design and test instrumentation systems is expected to have driven Keysight’s fiscal fourth-quarter top line.

Moreover, synergies from acquisitions of Prisma, Anite and Ixia, which have enriched Keysight’s 5G solutions portfolio, are likely to get reflected in the fiscal fourth-quarter revenues. Notably, the buyouts have been enabling the company to offer comprehensive solutions across the end-to-end communications workflow.
 

Keysight Technologies Inc. Price and EPS Surprise

 

Keysight Technologies Inc. Price and EPS Surprise

Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote

Notably, the Zacks Consensus Estimate for Communications Solutions Group (CSG) is pegged at $704 million, indicating an improvement of 24.4% from the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for Ixia Solutions Group (ISG) is pegged at $107 million, suggesting a decline of 7% from the prior-year reported figure.

Further, collaborations with Qualcomm, Xilinx and AT&T (T - Free Report) are expected to have benefited the company in expanding business in the 5G network emulation market. Moreover, latest 5G product design validation deal wins from Bureau Veritas, Qualcomm, Qorvo (QRVO - Free Report) are expected to have driven revenues in the fiscal fourth quarter.

Growing clout of radar technologies for autonomous driving, and high-power devices and applications have been driving demand for the Keysight’s solutions in this end market. Increasing demand for electric and hybrid cars also bode well for the company’s product portfolio, which was enhanced by Scienlab acquisition.

These factors are likely to have driven growth of Electronic Industrial Solutions Group (EISG) segmental revenues. Notably, the Zacks Consensus Estimate for EISG revenues is pegged at $289 million, indicating growth of approximately 16.1% from the year-ago reported figure.

The company’s latest Automotive Cybersecurity Test Portfolio solution is anticipated to get reflected in incremental revenues in the fiscal fourth quarter. The new security validation solution has been aimed at enhancing 4G/5G radio access network infrastructure with cybersecurity of connected vehicles.

However, Huawei blacklisting and imposition of tariffs owing to the U.S.-China trade war is anticipated to have limited the fiscal fourth-quarter top line.

Zacks Rank

Keysight carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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