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Keysight (KEYS) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research
·4 min read

Keysight Technologies, Inc. KEYS is scheduled to release second-quarter fiscal 2020 results on May 26.

Due to the coronavirus pandemic, the company announced on Mar 18, 2020, that it may not be able to meet second-quarter fiscal 2020 guidance provided in the last earnings call. The company had to temporarily shut down many of its locations globally until at least the end of March.

The Zacks Consensus Estimate is currently pegged at $1.09 billion, which indicates growth of 0.2% from the prior-year quarter.

We note that the Zacks Consensus Estimate for earnings has been steady at $1.18 per share over the past 30 days, suggesting a decline of 3.3% from the year-ago reported figure.

Notably, the company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 19.11%.

Keysight Technologies Inc. Price and EPS Surprise

Keysight Technologies Inc. Price and EPS Surprise
Keysight Technologies Inc. Price and EPS Surprise

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

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Factors to Note

Keysight’s fiscal second-quarter performance is expected to have gained from rising demand of its semiconductor measurement solutions on the back of allegiance of semiconductor companies to develop chips on next-generation process technologies.

In fact, the company recently announced that it is collaborating with NVIDIA NVDA to accelerate the development of high-value mobile services and flexible virtualized networks. Per the deal, semiconductor giant, NVIDIA, will utilize Keysight’s UE emulation (UEE) solutions to test its Aerial software development kit (SDK).

Moreover, deal wins from QUALCOMM Incorporated QCOM, Viomi Technology VIOT, DEKRA, during the qurter under review, remain noteworthy, in this regard. Robust adoption of the company’s offerings is instilling investor confidence in this Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of the company have gained 28.8% in the past year, compared with the industry’s rally of 27.3%.



Solid demand for the company’s solutions in next-generation energy technologies and momentum in first-to-market solutions, might have contributed to the fiscal second-quarter performance.

Growing clout of radar technologies for high-power devices and applications amid higher spending on aerospace and defense have been driving demand for the Keysight’s solutions in this end market.

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 $304 million, compared with prior-quarter reported figure of $277 million.

Moreover, strong order growth in the wireless ecosystem primarily fueled by advancement in 5G investment and robust adoption of Ixia’s Network Applications & Security solutions may get reflected in Communications Solutions Group (CSG) fiscal second-quarter revenues.

Notably, the Zacks Consensus Estimate for CSG is pegged at $869 million, compared with $818 million reported in the fiscal first quarter.

Besides, momentum in the company’s innovative PathWave Test 2020 software and latest support solutions, including Keysight Care, is expected to have led to gross margin expansion in the fiscal second quarter.

Additionally, growing usage of electronics-based testing equipment across medical devices and pharmaceutical markets, led by coronavirus crisis, might have benefited the performance in the quarter to be reported. Further, as employees are being forced to work from home due to the COVID-19 pandemic, there is an increasing demand for high-speed connectivity, which is expected to have bolstered adoption of the company’s 5G testing solutions. This is likely to get reflected in the fiscal second-quarter results.

Nevertheless, the coronavirus outbreak in China might have weighed on Keysight’s fiscal second-quarter performance, as the company is exposed to the demand environment in the country. Also, Huawei blacklisting is anticipated to have limited growth in revenues in the fiscal second-quarter.

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
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Viomi Technology Co., Ltd. Sponsored ADR (VIOT) : Free Stock Analysis Report
 
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