Agilent slumps on 3Q results and lower outlook

Agilent falls as 3rd-quarter results miss estimates and company cuts fiscal 2012 forecasts

Associated Press

NEW YORK (AP) -- Shares of Agilent Technologies Inc. slumped Thursday after the company posted disappointing third-quarter results and cut its estimates for the full fiscal year.

THE SPARK: Agilent reported weaker global demand for its high-tech measuring products. Its third-quarter net income and revenue fell short of Wall Street expectations, and the company also cut its income and revenue forecasts for the full year as it projected a slow fourth quarter.

Agilent reported an adjusted profit of 78 cents per share, about 4 cents below Wall Street estimates according to FactSet. Its revenue of $1.72 billion was about $70 million below expectations.

In the fourth quarter the company expects 80 to 82 cents per share in adjusted income, about 12 cents below estimates, and $1.76 billion to $1.78 billion in revenue, which was around $100 million less than expected.

THE BIG PICTURE: Agilent, based in Santa Clara, Calif., provides bio-analytical and electronic measurement tools to the communications, electronics, life sciences and chemical analysis industries. The company is now forecasting income of $3.06 to $3.08 per share for the year, down from its prior estimate of $3.18 to $3.24 per share. It lowered its revenue estimate to a range of $6.85 billion to $6.87 billion, from $6.94 billion and $7 billion.

THE ANALYSIS: Citi Investment Research analyst Amit Bhalla said businesses that depend on government funding and industrial work, like Agilent's aerospace and defense, environmental, and chemical and energy divisions, "fared worse in the quarter offsetting relative strength in communications, food, and pharma."

Bhalla said the company reported that about $50 million in orders were delayed during the quarter, and he said that is bad news for Agilent and for competitors like Danaher Corp., Thermo Fisher Scientific Inc., and Waters Corp. He kept a "Buy" rating on Agilent shares and cut his price target to $47 per share from $51.

Stifel Nicolaus analyst Patrick Newton said the company's revenue is under pressure and will stay that way in the fourth quarter, but its profit margins held up well during the third quarter and the company may do better than expected in the current quarter. Newton also reiterated a "Buy" rating.

SHARE ACTION: Agilent shares lost $3.48, or 8.6 percent, to $37 in afternoon trading. The stock is up 13.7 percent since July 24, when it finished at its lowest closing price in six months.

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