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Keysight Technologies (KEYS - Free Report) is a Zacks Rank #5 (Strong Sell) that is a provider of electronic design and test instrumentation systems. The company caters to the communications, networking, aerospace, defense, and government, automotive, energy, semiconductor, electronic, and education industries.
The company reported earnings last November and since then the stock has rallied 30%. Investors might be getting ahead of themselves as earnings estimates tick lower.
About the Company
Keysight Technologies was founded in 1939 and is headquartered in Santa Rosa, CA. The company employs about 15,000 people and sells its products through direct sales force, distributors, resellers, and manufacturer's representatives.
KEYS is valued at $26 billion and has a Forward PE of 21. The stock holds Zacks Style Scores of “C” in both Momentum and Growth, but “D” in Value.
Q4 Earnings
Keysight reported a 6% EPS beat and beat on revenues back in November. The company's Q1 revenues were in line and took Q1 EPS to a range of $1.53-1.59 versus the $1.69 expected.
Based on the price action and the reaction to earnings in the previous quarter, investors were nervous about the Q4 earnings report. When the numbers came in above the expected, a relief rally started and the gap lower from August was filled.
However, investors should be taking profits as numbers are starting to head lower ahead of Keysight’s earnings in late February.
Earnings Estimates
Over the last 90 days, earnings estimates for the current quarter have fallen from $1.72 to $1.58, or 8%. For the next quarter, estimates have dropped 12%, going from $1.87 to $1.64 over that same time frame.
For the current year, estimates have been taken from $7.74 to $7.06, or lower by 9% over the last 90 days.
Looking at next year, estimates have the same trend lower. Over the last 90 days, numbers have fallen to $7.94 from $8.67, a move of 8%.
While the company did post an earnings beat, the rally back to prior levels seems overdone when you take into consideration the pullback in estimates.
Technical Take
The move higher after earnings cleared all moving averages, but recently the stock has broken the 21-day MA. KEYS looks like it will test the 200-day MA at $147 and if that breaks has the possibility of falling to the 50-day MA at $144.
Investors might want to take some profits and reconsider the name around the $135 area. This is the 61.8% Fibonacci retracement drawn from 2023 lows to recent highs.
In Summary
Keysight spooked investors back in 2023 when an earnings report took the stock to multi-year lows. After the recent earnings brought relief, the stock it right back to where it traded for the first half of 2023.
With earnings estimates on a clear downward trend, investors should be cautious with the stock and look to sell any rally.
For those interested in the space, a better option might be Camtek (CAMT - Free Report) . The stock is a Zacks Rank #3 (Hold) that is trading near all-time highs.
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Bear of the Day: Keysight Technologies (KEYS)
Keysight Technologies (KEYS - Free Report) is a Zacks Rank #5 (Strong Sell) that is a provider of electronic design and test instrumentation systems. The company caters to the communications, networking, aerospace, defense, and government, automotive, energy, semiconductor, electronic, and education industries.
The company reported earnings last November and since then the stock has rallied 30%. Investors might be getting ahead of themselves as earnings estimates tick lower.
About the Company
Keysight Technologies was founded in 1939 and is headquartered in Santa Rosa, CA. The company employs about 15,000 people and sells its products through direct sales force, distributors, resellers, and manufacturer's representatives.
KEYS is valued at $26 billion and has a Forward PE of 21. The stock holds Zacks Style Scores of “C” in both Momentum and Growth, but “D” in Value.
Q4 Earnings
Keysight reported a 6% EPS beat and beat on revenues back in November. The company's Q1 revenues were in line and took Q1 EPS to a range of $1.53-1.59 versus the $1.69 expected.
Based on the price action and the reaction to earnings in the previous quarter, investors were nervous about the Q4 earnings report. When the numbers came in above the expected, a relief rally started and the gap lower from August was filled.
However, investors should be taking profits as numbers are starting to head lower ahead of Keysight’s earnings in late February.
Earnings Estimates
Over the last 90 days, earnings estimates for the current quarter have fallen from $1.72 to $1.58, or 8%. For the next quarter, estimates have dropped 12%, going from $1.87 to $1.64 over that same time frame.
For the current year, estimates have been taken from $7.74 to $7.06, or lower by 9% over the last 90 days.
Looking at next year, estimates have the same trend lower. Over the last 90 days, numbers have fallen to $7.94 from $8.67, a move of 8%.
While the company did post an earnings beat, the rally back to prior levels seems overdone when you take into consideration the pullback in estimates.
Technical Take
The move higher after earnings cleared all moving averages, but recently the stock has broken the 21-day MA. KEYS looks like it will test the 200-day MA at $147 and if that breaks has the possibility of falling to the 50-day MA at $144.
Investors might want to take some profits and reconsider the name around the $135 area. This is the 61.8% Fibonacci retracement drawn from 2023 lows to recent highs.
In Summary
Keysight spooked investors back in 2023 when an earnings report took the stock to multi-year lows. After the recent earnings brought relief, the stock it right back to where it traded for the first half of 2023.
With earnings estimates on a clear downward trend, investors should be cautious with the stock and look to sell any rally.
For those interested in the space, a better option might be Camtek (CAMT - Free Report) . The stock is a Zacks Rank #3 (Hold) that is trading near all-time highs.