Here's Why This Hot Technology Stock Soared This Week
Test and measurement technology company Keysight Technologies (NYSE: KEYS) stock is up a whopping 14.3% in the week to Friday morning. The move comes as the market warmed to its third-quarter earnings released earlier in the week.
Keysight Technologies' third quarter
It's not that its year-over-year core revenue growth or core orders growth turned positive (down 13% and 1%, respectively), and it's not that management called the bottom in its end markets.
Instead, the optimism comes from Keysight beating revenue expectations in the quarter, and its overall conditions are not worsening. As with the technology sector, investors look for early signs of a trend reversal in order patterns. That's especially the case with a company like Keysight, whose revenue is based on its customers' willingness to invest in research and development (R&D) -- usually the first thing to get cut in a slowdown.
Improvement coming
The good news is that management sees its second-half orders improving over its first-half orders, and there are pockets of progress. For example, its commercial communications orders had a double-digit rise on a year-over-year basis, and its semiconductor orders saw a low-single-digit rise, driven by end demand from spending on artificial intelligence (AI) applications.
Those improvements in orders almost fully offset declines in automotive, aerospace, and defense & government orders.
Image source: Getty Images.
Where next for Keysight Technologies
CEO Satish Dhanasekaran expects "a more gradual recovery in 2025, barring any further macroeconomic degradation." This outlook is similar to that given by Emerson Electric CEO Lal Karsanbhai when discussing Emerson's test and measurement business outlook: "We foresee sales turning positive there in the second half of 2025 with orders turning positive in the first half of 2025."
As such, investors shouldn't expect too much too soon, but given that this will likely prove to be a trough year, the stock, trading at 25 times expected earnings, looks like a decent value.Should you invest $1,000 in Keysight Technologies right now?
Before you buy stock in Keysight Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Keysight Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $758,227!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of August 22, 2024Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Emerson Electric. The Motley Fool has a disclosure policy.
Welcome to Billionaire Club Co LLC, your gateway to a brand-new social media experience! Sign up today and dive into over 10,000 fresh daily articles and videos curated just for your enjoyment. Enjoy the ad free experience, unlimited content interactions, and get that coveted blue check verification—all for just $1 a month!
Account Frozen
Your account is frozen. You can still view content but cannot interact with it.
Please go to your settings to update your account status.
Open Profile Settings