Keysight's (KEYS) 5G Emulation Solutions Gaining Traction

Keysight Technologies, Inc. KEYS recently announced that its end-to-end 5G emulation solutions have been adopted by CETECOM to comply with 5G new radio (NR) certification criteria per the latest 3GPP standards.

Mobile operators are accelerating deployment of 5G services to boost applications across consumer, industrial IoT, autonomous transportation, remote healthcare and agriculture sectors.

Notably, per the Global mobile Supplier’s Association (GSA) report titled, 5G Devices Ecosystem June 2020 – Executive Summary, 84 device vendors are expected to commercially launch more than 296 5G devices in 16 different form factors.

This fast pace of 5G deployment favors adoption of Keysight’s 5G solutions, which supports the 5G devices ecosystem to validate the performance in any form factor compliant with 3GPP frequency standards.

Markedly, CETECOM offers testing and certification services to mobile operators for testing telecommunication products. Keysight’s 5G solutions will enable the company to certify 5G NR devices in compliance with the latest mobile operator acceptance plans and 3GPP standards.

Growing clout of Keysight’s 5G solutions amid accelerated deployment of 5G is expected to bolster revenues in the quarters ahead as well as boost investors’ optimism in the stock.

Notably, shares of Keysight have returned 3.6% year to date compared with the industry’s rally of 2.6%.

Strength in 5G Test Solutions Augurs Well

Keysight is well poised to capitalize on strong growth in the wireless ecosystem primarily triggered by intensive infrastructure investments in 5G deployment and positive trial testing results.

The company’s 5G network emulation solutions facilitate end-to-end processes from development to deployment, accelerating the 5G device architecture. The solutions offer cost-efficient test techniques with high flexibility and control capabilities, reducing time-to-market.

Moreover, Keysight’s solutions enables its customers to verify cases in accordance with GCF and PTCRB regulations, for radio resource management (RRM), radio frequency (RF) and protocol testing.

The company’s press release states, “30% of 5G devices announced to date support mmWave bands, also referred to as frequency range 2 (FR2).” The growing clout of 5G device certification in FR2 using over-the-air (OTA) test methods, is expected to bolster adoption of Keysight’s 5G solutions among mobile operators and companies like CETECOM.

Per Gartner data, 5G wireless network infrastructure revenues are projected to hit $4.2 billion in 2020, up 89% over projected revenues of $2.2 billion in 2019. Also, investments in 5G new radio (NR) network infrastructure is expected to comprise 12% of the total wireless infrastructure revenues of CSPs (or communications service providers) in 2020, compared with anticipated 6% in 2019.

This positions Keysight to benefit from 5G NR network collaborations with Qualcomm QCOM, Xilinx XLNX and AT&T T. This, in turn, will also help the company in fortifying presence in the global 5G network emulation market.

Besides, incremental adoption of the company’s latest LoadCore offering, a 5G core network testing solution that simulates complicated real-world subscriber models, bodes well.

Additionally, the surge in stay-at-home trends thanks to COVID-19 induced lockdowns is driving demand for high-speed connectivity. As a result, Keysight’s 5G test solutions are likely to witness improved rate of adoption in the days ahead.

COVID-19 Pandemic to Hurt Near-Term Prospects

The COVID-19 pandemic is expected to negatively impact near-term growth prospects of Keysight, currently carrying a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Supply chain disruptions and market uncertainties stemming from the ongoing pandemic is dampening the company’s performance. In second-quarter fiscal 2020, Keysight’s commercial communications (CC) revenues declined 5% year over year to $468 million.

Keysight Technologies Inc. Revenue (Quarterly)

Keysight Technologies Inc. Revenue (Quarterly)

Keysight Technologies Inc. revenue-quarterly | Keysight Technologies Inc. Quote

Moreover, due to the temporary shutdown of its production facilities, the company might not be able to fulfill the demand for its offerings that will likely impede revenue growth in the upcoming quarters.

Nevertheless, the company is improving production and services operations and anticipates returning to 100% capacity by the end of the fiscal third quarter amid persistent supply chain challenges.

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