Keysight shares rise on outlook as executives point to ‘stable’ backdrop

By Bill Peters

“Orders in the second half of the year will be higher than in the first half of the year, followed by a more gradual recovery in 2025,” the CEO says

Keysight Technologies Inc. shares rose after the close of trading Tuesday after the technology services provider delivered fiscal fourth-quarter guidance that beat Wall Street expectations, helped by a “stable” technology spending environment.

The company, whose hardware, software and other services help engineers with research and development, said it expected fourth-quarter sales of $1.245 billion to $1.265 billion, with the midpoint of that range slightly above FactSet analysts’ estimates of $1.251 billion.

Keysight (KEYS) expects adjusted earnings per share of $1.53 to $1.59 for the period, beating analysts’ expectations of $1.54.

The company’s shares were up 11.5% after the close of trading on Tuesday. However, the stock is still down 12.9% this year.

In a statement, Chief Executive Satish Dhanasekaran said market conditions were “stable and in line with our expectations.”

“The opportunity funnel confirms our forecast that second-half orders will exceed first-half orders, followed by a more gradual recovery in 2025, barring further macroeconomic deterioration,” he noted.

Keysight released the results amid mixed sentiment in tech spending after a stronger 2023 for the company and many of its peers, and amid an economy that is reeling from ongoing recession fears.

Keysight executives said in May that spending on areas such as artificial intelligence and defense upgrades had helped its finances. But they said the semiconductor business, while improving, was still struggling with project delays and added that spending in electronics was “constrained,” especially as China’s economy remains fragile.

Keysight reported net income of $389 million, or $2.22 per share, in the fiscal third quarter, compared with $288 million, or $1.61 per share, in the same quarter last year. Adjusted earnings were $1.57 per share.

Revenue for the quarter was $1.22 billion, down from $1.38 billion in the same period last year.

Analysts surveyed by FactSet were expecting adjusted earnings of $1.35 per share on revenue of $1.19 billion.

-Bill Peters

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08-20-24 2237ET