Will Top-Line Contraction Dent Keysight (KEYS) Q1 Earnings?
Keysight Technologies, Inc. KEYS is scheduled to report first-quarter fiscal 2024 results on Feb 20 after the closing bell. It pulled off a trailing four-quarter earnings surprise of 8%, on average.
Based in Santa Rosa, CA, the electronic design company is expected to have recorded a revenue contraction owing to sluggish demand trends in consumer electronics and inventory adjustments. Despite its robust 5G portfolio and strategic collaborations, uncertainty at the macroeconomic end and forex volatility remain headwinds.
Factors at Play
In the quarter, in collaboration with Metanoia Communications, the company announced that it successfully validated the 5G Low Physical Layer Open Radio Unit. The partnership leveraged Keysight’s Open RAN Studio. The company also brought into the market Keysight Elastic Network Generator software to accelerate and streamline network validation procedures.
The solution built on vendor-neutral API offers significant adaptability and can run in a wide range of testing environments with ease. Such innovations are likely to have had a positive impact on the quarterly earnings.
In the quarter under review, Keysight announced the launch of an extensive suite of solutions designed to facilitate autonomous and electric vehicle development and support automotive engineers. It includes an advanced Charging Discovery System, a one-stop solution that assesses all AC and DC charging interfaces of electric vehicles and electric vehicle supply equipment.
The all-in-one system offers real-time emulation of all electrical interfaces, including V2G (Vehicle-to-Grid) communications and energy transfer. The company introduced Keysight EP1150A PathWave Lab operations, an integrated web-based platform that maximizes the efficiency of the battery testing lab and optimizes expenses.
However, unpredictable movement in exchange rates of foreign currencies, slow demand trends in smartphone and PC computing markets and revenue decrease across its business verticals remain major concerns for the company. The sluggish demand trend in China and the imposition of tariffs owing to the trade war between the United States and China is likely to have had an adverse impact on the company’s performance.
For the January quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,246 million, which indicates a decline of 9.7% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at $1.58, suggesting a decrease from the prior year’s figure of $2.02.
Earnings Whispers
Our proven model does not predict an earnings beat for Keysight in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keysight Technologies Inc. Price and EPS Surprise
Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote
Zacks Rank: Keysight has a Zacks Rank #3
Stocks to Consider
CommScope COMM is scheduled to report quarterly numbers on Feb 29. It has an Earnings ESP of +9.09% and a Zacks Rank of 3.
The Earnings ESP for NVIDIA Corporation NVDA is +5.26% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 21.
The Earnings ESP for Cogent CCOI is +10.00% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 29.
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