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Agilent (A) Announces Proposed Offering of Senior Notes

Zacks Equity Research

Agilent Technologies A recently announced its intention to offer a series of senior notes. The interest rate, principal amount, maturity date and other terms of the notes are yet to be determined. The offering is subject to market and other conditions.

BofA Securities, Mizuho Securities USA LLC and Wells Fargo Securities, LLC are acting as joint book-running managers for this purpose. In this regard, the company has filed for automatic shelf registration under the Securities and Exchange Commission.

Agilent intends to use the transaction proceeds from the offering for general corporate purposes and repay borrowings under the term loan facility.

Agilent Technologies, Inc. Price and Consensus


Agilent Technologies, Inc. Price and Consensus

Agilent Technologies, Inc. price-consensus-chart | Agilent Technologies, Inc. Quote

Cash Position

At the end of fiscal second-quarter 2020, Agilent’s cash and short-term investments totaled $1.32 billion compared with $1.23 billion at prior quarter-end. Long-term debt was $1.8 billion, flat sequentially.

During the recently reported quarter, operating cash flow was $313 million. Agilent paid $55 million in dividends and repurchased 1.66 million shares for $126 million.

In our view, the stock offering is expected to boost financial flexibility and help the company meet financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and rewarding higher returns to stockholders.

Bottom Line

Agilent’s expanding product portfolio, end-market strength and robust performance in key markets are growth drivers. Moreover, the company’s decision to divest/wind up underperforming businesses is beneficial for core operations.

Recently, Agilent expanded its share in next-gen sequencing, which is expected to drive top-line growth. Also, growth of the API business is a catalyst.

Its focus on aligning investments toward more attractive growth avenues and innovative high-margin product launches is another positive.

However, increasing competition and higher expenses are making margin expansion difficult for the company.

Zacks Rank and Stocks to Consider

Agilent currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Wayfair Inc. W, eBay EBAY and Inphi Corporation IPHI. While Wayfair sports a Zacks Rank #1 (Strong Buy), both eBay and Inphi carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Wayfair, eBay, and Inphi is currently projected at 23%, 12.4% and 37.7%, respectively.

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