Keysight shares rally on forecast as executives point to 'stable' backdrop

By Bill Peters

'Second-half orders to be above first-half orders, followed by a more gradual recovery in 2025,' CEO says

Shares of Keysight Technologies Inc. rallied after hours on Tuesday after the tech-services provider offered a fiscal fourth-quarter forecast that came in above Wall Street's expectations, helped by a "stable" backdrop for tech spending.

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 just above FactSet analyst estimates for $1.251 billion.

Keysight (KEYS) said it expects adjusted profit per share of $1.53 to $1.59 for the period, above analysts' forecasts for $1.54.

The company's shares jumped 11.5% after hours on Tuesday. However, the stock is still down 12.9% so far this year.

In a statement, Chief Executive Satish Dhanasekaran said that market conditions were "stable and consistent with our expectations."

"The funnel of opportunities supports our outlook for second-half orders to be above first-half orders, followed by a more gradual recovery in 2025, barring any further macroeconomic degradation," he noted.

Keysight reported results as the backdrop for tech spending remains mixed after a stronger 2023 for the company and many of its peers, and as businesses navigate an economy that has, for now, defied persistent worries of a recession.

In May, Keysight executives said spending on areas like artificial intelligence and defense-system upgrades helped its financials. But they said the semiconductor industry, while improving, was still facing project delays, and added that spending was "constrained" in electronics, particularly as China's economy remains shaky.

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

Revenue for the quarter landed at $1.22 billion, down from $1.38 billion in the year-earlier period.

Analysts polled by FactSet expected adjusted earnings per share of $1.35 on revenue of $1.19 billion.

-Bill Peters

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08-20-24 2237ET

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