Keysight’s Q1 Met Our Expectations, and We Like its Automotive Results so Far; Keeping $174 FVE

We’re maintaining our $174 fair value estimate for Keysight Technologies after the company reported fiscal first-quarter results in line with our above-consensus expectations. The market was relatively neutral to results, but we now view shares as ever-so-slightly undervalued after coming down from their December peak. We think Keysight is enjoying broad-based success across its portfolio and end markets. We think its comprehensive communications portfolio of hardware and software—which contributes to our wide economic moat rating—allows it to lead with 5G customers and benefit from ongoing adoption of next-generation networks. We also see early success of the firm’s growing automotive endeavors, which helped drive upside to management’s guidance in the fiscal first quarter.