KEYS
Keysight Technologies Inc
TMT, Industrial/Transportation
01/18/2023
Presented
| Date | 01/12/2023 |
| Price | $177.92 |
| Market Cap | $31.81B |
| Ent Value | $31.32B |
| P/E Ratio | 28.78x |
| Book Value | $23.31 |
| Div Yield | 0% |
| Shares O/S | 178.80M |
| Ave Daily Vol | 924,678 |
| Short Int | 2.08% |
Current
| Price | $158.06 |
| Market Cap | $27.43B |
| Keysight Technologies, Inc. engages in the provision of electronic design and test solutions that are used in the design, development, manufacture, installation, deployment, validation, optimization and secure operation of electronics systems to communications, networking and electronics industries. It operates through the following segments: Communications Solutions Group, and Electronic Industrial Solutions Group. The Communications Solutions Group segment serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and government end market. The Electronic Industrial Solutions Group segment offers test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education, and general electronics manufacturing. The company was founded by William R. Hewlett and David Packard in 1937 and is headquartered in Santa Rosa, CA. |
Publicly traded companies mentioned herein: Agilent Technologies Inc (A), Danaher Corp (DHR), Fortive Corp (FTV), Keysight Technologies Inc (KEYS), National Instruments Corp (NATI), Viavi Solutions Inc (VIAV)
Highlights
The presenter is short shares of Keysight Technologies Inc (KEYS), a test and measurement company that was spun out of Agilent Technologies in 2014. Products with electronic content must be tested for safety, which creates a major need when it comes to 5G development, the electrification of cars, and many other innovations. KEYS has become the de facto standard in R&D testing and is a good, sticky business with 30% EBIT margins and 65% gross margins. However, its strong growth over the last five years has been mainly driven by the 5G cycle, which he expects to slow in 2023, creating a challenging path to continued earnings growth. Modeling EPS of $7.50 in FY2023 (ends Oct. 31, 2023) and underwriting multiple contraction to 15x to account for the deceleration, he sees downside to $112.50 per share from the current $180.
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