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Goldman Keeps Agilent On Conviction Buy List Following Mixed Q3, Light Guidance

Goldman Keeps Agilent On Conviction Buy List Following Mixed Q3, Light Guidance - Agilent Technologies, Inc. NYSE:A

Agilent Technologies Inc A reported its FQ3 results, with the revenue in line with the consensus and EPS ahead of expectations.

Goldman Sachs’ Isaac Ro maintains a Buy rating on the company, with a price target of $50.

Guidance Conservative

Agilent Technologies revised its FY16 guidance, lowering the midpoint of the revenue guidance, while leaving the EPS guidance unchanged, driven entirely by FX.

“We continue to think the durability of Agilent’s top-line growth and margin expansion profile are underappreciated. While F3Q revenues were in-line with consensus and commentary on academic funding in Europe was negative, we think guidance looks conservative,” Ro mentioned.

The analyst noted that management continued to execute on its margin expansion targets, while explaining that the FQ4 guidance appeared conservative, given the fact that Agilent Technologies has beaten its growth and EPS guidance ever since CEO Mike McMullen took over in early 2015.


Ro pointed out that the Biopharma end markets grew 10 percent in FQ3, a trend that is likely to continue.

The chemical and energy markets remained flat, “but we see good risk/reward, as products exposed to E&P capex troughed last year,” the analyst added.

The European academic end markets declined in the double digits during the quarter due to restricted government funding.

“However, management noted that this pressure did not accelerate in July and that guidance assumes no acceleration in F4Q,” Ro stated.

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